[HN Gopher] Uber, Lyft pay $328M for "cheating drivers" out of e... ___________________________________________________________________ Uber, Lyft pay $328M for "cheating drivers" out of earnings, NY says Author : rntn Score : 154 points Date : 2023-11-02 18:13 UTC (4 hours ago) (HTM) web link (arstechnica.com) (TXT) w3m dump (arstechnica.com) | ccooffee wrote: | The terms of the settlement[0-pdf] are kind of interesting. | | Drivers in New York City proper are entitled to $17/hr for sick | pay. If I'm reading it correctly, that is also the minimum wage | that drivers must be compensated at. | | However, drivers who begin trips in New York State _but not | inside NYC_ are guaranteed pay at $26/hr [see paragraph 30 of | settlement]. If I'm reading this right, drivers in Buffalo, | Syracuse, Utica, Albany, etc. are all going to reap significantly | higher pay from Uber while living in much lower cost-of-living | areas. | | [0-pdf] https://ag.ny.gov/sites/default/files/settlements- | agreements... | dastbe wrote: | You're reading it wrong, you need to look at | https://www.nyc.gov/site/tlc/about/driver-pay-rates.page for | the pay rates. | | just looking at the per minute numbers, if you worked 60 | minutes of P2+P3 time you would make 33.84, which isn't even | considering the per-mile pay. | sschueller wrote: | Now pay the almost half a billion Swiss Francs you owe in unpaid | wages/retirement and sick leave to the Swiss drivers. | toomuchtodo wrote: | Is anything needed to assist the Swiss in pursuing this more | aggresively? | crazygringo wrote: | In terms of illegally deducting sales tax and black car fund fees | from drivers' pay... I genuinely don't understand why a large | corporation ever messes up like this in the first place. | | It surely can't be legal incompetence -- a large company like | this has lawyers to review these things, and who know the | contracts they've created. | | But it's hard to imagine Uber/Lyft thinking they're going to get | away with it -- obviously it's going to eventually turn into a | legal suit and they're going to lose. | | I really don't get it. Often these kinds of situations happen | when the law is ambiguous or unclear, and the company it taking a | calculated risk that the courts would rule in their favor. But | this doesn't seem to be that, unless I'm missing something? | Scoundreller wrote: | Maybe it's like Google handing back all the money it made in | its early years from advertising gray/black-market pharmacies | and prescribing mills. | | They needed the money then, and had no problem paying it back | in 2011, many years later. And if they went bankrupt, well, no | way to pay back anyway. | | Classic "heads we win, tails you lose" situation. | | Cheaper source of capital than venture capital. And no hit to | the cap table. | | https://theguardian.com/technology/2011/aug/24/google-settle... | sitkack wrote: | It is fraudulent and stealing, I would think there would be | criminal charges against the perpetrators. | Nextgrid wrote: | Fraud/theft only happens to the common man. When a company | does it it's either good business acumen or (if they got | caught) a "technical glitch affecting a small percentage of | users". | | See also: Comcast mis-billing customers. | plagiarist wrote: | The perpetrators are corporations, those are only people when | it is convenient for the ruling class for them to be people. | techsupporter wrote: | Sometimes it is incompetence; someone flags a certain thing as | the wrong classification and it comes out of the wrong bucket. | | But I think it's more than that, here. The settlement covers | almost the height of when Uber and Lyft were desperately trying | to undercut everyone else in the market--taxis, public transit, | taking a bike, scooter-share, anything--and keeping these out | of view of the customer helps a lot in that effort by making | the price look lower. | | > The Uber settlement fund is for people who "drove for Uber | between November 10, 2014, and May 22, 2017, and had deductions | taken for New York sales tax and Black Car Fund fees." The Lyft | fund is for people who drove for Lyft between October 11, 2015, | and July 31, 2017, and had the same kinds of deductions. | | By my mind, it's in the same vein as businesses (everyone from | Comcast to that small restaurant on the corner) that list one | price in big numbers but tack on surcharges at the end. | Obscuring the true price should be more illegal than it is. | tialaramex wrote: | The trouble is that Americans seem to be onboard with not | adding taxes, and so that's your slippery slope right there. | In Europe regulators are like "If the headline price is EUR10 | but actually nobody pays EUR10, that headline price is wrong | and must be fixed" and they're including taxes in that. | | In IT there was a UK battle years back when magazines were | still a big deal about whether you could advertise prices | without VAT. All these companies charge retail customers VAT | of course, but in effect the way VAT works the price is | without VAT if you are yourself a business that claims VAT | refunds. So the argument in some of these magazines was, | look, you can buy this magazine as a hobbyist, you can buy | this Western Digital 200MB hard disk from an advertiser as a | consumer, and you'd pay VAT. But actually they advertise in | our magazine because many readers work in IT, so while they | might get 10 hobbyist orders for that 200MB disk, they also | get one or two business orders for a hundred drives, and | those customers don't pay VAT so why must we show VAT prices | ? | Amezarak wrote: | I've never been sympathetic to the American argument that | we want people to constantly feel how much they're paying | in taxes, but VAT might be a good point in their favor. VAT | is very high (20-25% in many countries) and horrifically | regressive. It would be a nonstarter for even people like | me, who support raising taxes in the US, because of that. | Mechanical9 wrote: | VAT has other benefits though that would fix a lot of | weirdness that traditional sales tax has. Taxing the | value added makes a lot more sense than taxing the | "sale", IMO. It distributes the tax fairly among all | businesses in the supply chain and eliminates double- | taxing that can happen when the local mom and pop shop | resells soda from Sam's Club. | Amezarak wrote: | There is of course no national US sales tax and every | state does it differently - some even have no sales tax | at all - but generally speaking, it's already structured | to prevent double-taxing situations like the one you're | describing (plus groceries are usually exempt anyway in | both cases.) | | The issue is VAT is astronomical compared to the US and | hits the poor hardest because consumption taxes are | regressive. If it were more apparent on on pricing how | much was tax, I could see people who make that argument | here having a point. I find it hard to believe Europeans | would not blink at seeing such a regressive tax day after | day. | lozenge wrote: | It doesn't really matter how regressive an individual tax | is as it's part of a larger system. | | You don't just pay regressive VAT, you also benefit from | progressive income tax, progressive education and health | policies, etc. | gustavus wrote: | > The trouble is that Americans seem to be onboard with not | adding taxes, and so that's your slippery slope right | there. In Europe regulators are like "If the headline price | is EUR10 but actually nobody pays EUR10, that headline | price is wrong and must be fixed" and they're including | taxes in that. | | Again the problem is that the taxes are different in every | municipality and state which presents a calculating | nightmare. I mean you do the math on 0.0625% of $17.23. | It's super difficult to do and can change frequently anyone | that wants to run a business in more than one or two | municipalities would have to hire someone full time. Plus | there's the extra headache of running a sale, etc. | | It is more helpful to think of the US as 50 different | states that have a common federal government rather than a | single united whole. | RF_Savage wrote: | If they can charge it, why can't they mark it? | dboreham wrote: | They can and do (airline tickets for example). Most hotel | web sites will also give you an "all-in" price, although | they retain the dark patterns of displaying the ex-tax | rate by default, and slipping in a "resort fee" when you | check in. | brendoelfrendo wrote: | Gee, if only ride share apps had access to both your | starting and ending locations so that they could | accurately assess taxes and fees. This is not an | intractable problem when your product is a software | platform that can look at the location data and do the | math for you. | | > anyone that wants to run a business in more than one or | two municipalities would have to hire someone full time. | | Yes, when you're trying to operate a nation-wide | business, you should generally hire accountants and | lawyers, or at least consult with them and take their | good advice. | Mechanical9 wrote: | Americans also don't know how much their taxes are. | Retailers often use taxes to hide extra charges by bundling | both into a "taxes and fees" section, which if enumerable | always includes more fees than taxes. Uber Eats, GrubHub, | etc all do this. | jzb wrote: | "obviously it's going to eventually turn into a legal suit and | they're going to lose." | | I'm not convinced that's obvious. I'm guessing for every story | of "large corporation held to account for breaking wage laws / | committing wage theft" there are 5 stories of them _not_ being | held to account. (I could be wrong - it could be 2 stories, it | could be 10... but I 'm willing to bet they get away with it | more than they don't.) | | Also - is the amount they pay out more than or even equal to | what they grabbed, or less? If I read the settlement correctly | this means that there won't be a full investigation, e.g. - a | deep dive to find out how much money they actually skimmed. | This is a settlement so I don't think they ever actually got an | absolute tally of how much money was in question. | | I'd also consider that the _corporation_ may face consequences | but the individuals who green lit the decisions are unlikely to | suffer. In fact, by the time the bill comes due, legally, isn | 't there a good chance the folks have already updated their | resume with glowing current numbers and moved on to another | company? The time period in question was 2014-2017. How many | people are even still at those companies from that time period | that made these decisions? | dogsgobork wrote: | If they do something illegal and don't get caught they win. If | they get caught, but the fine is less than they made breaking | the law, they win. If they have to pay back the same amount of | money, but can pay it years later, they win. If the only | punishment for bank robbery were paying the bank back if you | got caught, we'd probably see a lot more bank robberies. | FireBeyond wrote: | > If the only punishment for bank robbery were paying the | bank back if you got caught | | ... and on a schedule mostly convenient for you... | polygamous_bat wrote: | In the US corporations are people with some extra | provisions for robberies. | brandall10 wrote: | The Pinto Memo is a great exposition of this... $140M cost to | retrofit a modification to the fuel system against a $50M | "benefit to society" (ie. legal costs) saving 180 deaths and | 180 serious injuries per annum. | rqtwteye wrote: | Same for US hospitals and health insurance. They constantly | make "mistakes" in their favor and the worst thing that can | happen is that they have to pay what they are required to pay | anyways. | holoduke wrote: | The worse thing of all is that these companies dont care for | its drivers. On what kind of earth do we live. Hopefully these | kind of companies will be seen as pure evil in history books in | 100 years from now. | wavemode wrote: | The way it would usually go is that one or more higher-ups | whose job it was to optimize pricing decided to get "creative" | with the law. People who eventually noticed that things seemed | shady/irregular probably spoke up but their concerns were | dismissed (with the same reasoning you mention - "the lawyers | probably looked at all of this - of course it must be perfectly | legal!") and so they stopped wasting their breath. | | (Probably also on some level Lyft felt like they needed to | follow suit in order to compete on price in their most populous | and important customer region.) | | Keep in mind that the lawyers aren't software engineers - if | you tell legal that you're doing A but in the code you're | actually doing B, they will tell you "A is perfectly legal, | keep doing that." They're not going to review the code for | themselves. | solardev wrote: | To these companies, the law is just another cost of doing | business to be accounted for and amortized whenever possible. | If they can feign success in the early years, they get a bunch | of investor dollars that they can then use to pay off or bribe | their way out of legal situations later, when they're much | bigger. | | After all, they did get away with it, didn't they? 290 million | is like 4% of one quarter's revenue for them, to pay back 6 | years of operating illegally. Seems like a slap on the wrist if | there ever was one. | akavi wrote: | Barring evidence to the contrary (internal emails/discussion), | I _definitely_ would assume mistake over malice. | | I've worked in Monetization at 3 SaaS cos (admittedly all | smaller than Uber, O(100-1000) employees), and at all of them | I've seen mistakes of a similar proportion of revenue (~1%) | made in both directions (overcharging and undercharging | customers) in violation of the letter of our contracts with | absolutely zero intent or malice. | | Wage law adds _several_ additional layers of complexity beyond | that. | dastbe wrote: | at least one cloud provider service over (and sometimes | under) charged customers for several years on a particular | product due to a misinterpretation of some complex rules. it | happens at all orders of magnitude. | plagiarist wrote: | This is a wage theft. From the sheer scale of wage theft going | on in this country, yes, they do think they will get away with | it. And the punishment if they don't is inconsequential. | wahnfrieden wrote: | Isn't wage theft the most common and largest form of theft? The | reputation of business in the US precedes itself | | Odd that when this common thievery impacting the hardest | working among us shows up among business inclined folks the | reaction is oh it must have been in good faith, must be some | kind of mistake. When lower stakes lower impact shoplifting | occurs, people are immediately discussing punishments and | outcries for jettisoning groups of people to preserve our | social fabric. | gen220 wrote: | It's a loan to the Uber at t=x, issued by Uber at t=y+x. The | interest on the loan is legal fees and penalties. When the | value of the money at t=x is greater than the predicted cost of | interest, and you aren't bound by ethical scruples, you take | the cash. | | Sure, a couple drivers might have needed to take out predatory | loans to cover their stolen income, but hey at least the | company still exists today to fund their future, unbridled | income! They should be thankful, actually. | | Yep, it is the mental gymnastics of might-makes-right. | varispeed wrote: | Here the UK government addressed this issue by marrying worst | elements of employment and self-employment. With the revised IR35 | rules, a company can bring someone on board as a "deemed | employee". This means they have to pay the individual through a | fee payer, that deducts employee and employer taxes. However, | even though these workers are taxed like employees, they are | officially self-employed and therefore do not receive the usual | employment rights and benefits. So things like minimum wage don't | apply. | Night_Thastus wrote: | It's only a matter of time before Uber and Lyft cease to exist. | Lyft lost what, $1.5 billion last year? The trend isn't towards | profitability, and they have had plenty of years to work out the | kinks and figure out structural issues. | | I've said it before, and I'll say it again - if you were to pay | for _real_ cost of overhead and to pay the driver, you 'd end up | with a price that no customer is willing to pay. | | Uber has briefly entered profitability, but only by absolutely | shredding any pay to their drivers, who will jump ship | eventually. | | The reality is that once investors wake up and close their | pockets, these companies vanish into dust. It's either that or | their drivers will abandon them. | cozzyd wrote: | I almost never use Uber or Lyft rideshare (sometimes on | business travel if no reasonable public transport, but since | I'm not paying I'm less cost sensitive there), but Lyft runs | the bikesharing system in my city, so hopefully that can be | salvaged, since I use that lot... | Scoundreller wrote: | My guess is that they're profitable in some regions and losers | in others. They don't need to disappear everywhere if they run | out of capital to work with. | | They probably run real-life experiments to see "what happens if | we increase prices 25% in a region" and have a model for how | that can be applied everywhere and where they would just have | to close up shop if they needed to go into profit-mode instead | of maintenance or growth mode. | potatolicious wrote: | I suspect you're right, but there lies the bitter | disappointment with these companies. | | I'm sure Uber in NYC makes money, and DoorDash in NYC makes | money... but _those are also the places where those services | have existed for many decades profitably_. | | The whole promise was that with [insert handwaviness] | technology the business model can be made to work in places | where it was never sustainable before (i.e., the suburbs and | much smaller cities). This... overwhelmingly hasn't panned | out. | | I'm generally skeptical of the oversimplistic "you've | invented [thing]" complaints that are often leveled at new | tech, but in this case... the shoe does seem to fit. | | The only places this business model seems to work are places | where the business model has _always worked_! | Nextgrid wrote: | > if you were to pay for real cost of overhead and to pay the | driver | | How come taxis existed then? I find it hard to believe that | taxis could turn a profit despite being very low-tech and | inefficient compared to Uber. | | I wonder if the real reason Uber isn't profitable is more due | to "growth & engagement". How much money is wasted on US-salary | engineers playing with microservices in their engineering | playground or burned on ads? | AmericanChopper wrote: | Terrible take. Rideshare apps aren't going anywhere, because | they are strictly better than regular taxis, and demand for | taxis isn't going anywhere. | | Maybe some individual companies might go bust, and probably | rideshare prices will continue to increase towards typical taxi | prices, but there's no reason at all to think the apps are | going anywhere. | Night_Thastus wrote: | The _demand_ for rideshare apps is enormous. It 's the only | thing keeping investors interested. | | But there's no way to make them profitable as it stands. | AmericanChopper wrote: | Of course there is, once the investor subsidies go away | they won't have to compete on price so much, and prices | will go up. | | All of the services that rideshare apps offer were highly | demanded before the apps existed, and they were all | delivered at more expensive prices with perfectly decent | profit margins. | | If VC money stops funding these products, then the prices | have to go up to something similar to "traditional" prices | for those services, but consumers will still choose to use | the apps, because the service they provide will still be | substantially better than the traditional service. | freeone3000 wrote: | Traditional services have gotten way better -- in that, | they got an app. Teo went from an obscure local taxi | service to a great local taxi service, and now | _undercuts_ uber because they don't have an insane | advertising burn to subsidize. | reducesuffering wrote: | Uber Rides are profitable and subsidizing Uber Eats growth. | Any take that "Uber will cease to exist" is farcical. | BeetleB wrote: | > Rideshare apps aren't going anywhere, because they are | strictly better than regular taxis, and demand for taxis | isn't going anywhere. | | I've had poor experiences with Uber/Lyft at airports. Taxis | are way better. Sometimes there's not enough luggage space in | the car for my luggage, and I won't know that until _after_ I | 've called them and waited a long time. If I cancel, I end up | paying. | | (And it's not about me picking a small car - they've got a | lot of their personal stuff in the trunk so the capacity is | smaller). | | Also, plenty of rude Uber/Lyft drivers ("Hey! You were on the | wrong side of the road! I could get in trouble for picking | you up on the other side of the road!"). | | We're talking about a single lane each way road, and I went | to the other side because I knew he was coming from that | direction. | | Still, being able to call one via an app is convenient | compared to taxis. | dboreham wrote: | > Uber/Lyft at airports | | That's only because their software lacks the necessary | feature (select driver based on imminent arrival at the | curb, from a queue of arriving drivers). | | Since that feature doesn't seem hard to implement, | presumably the underlying reason is regulations to do with | airport pickup. | xyst wrote: | Their success is largely due to the fact that American cities | are built so poorly. Emphasizing suburban sprawl and associated | highway, parking, and street infrastructure over safe and | walkable/bikable cities. | | Also investor subsidies due to low interest loans or cheap | money from banks. Although that is quickly going away. | | If it weren't for these two items, Lyft/Uber would just be | another mediocre taxi service. | rightbyte wrote: | Their success is due to the taxi medallion system. | gumballindie wrote: | I am wondering how much of silicon valley "success" is just theft | and lies? Yesterday's unicorns, today's ai, all seem to gravitate | around shady practices. | CoastalCoder wrote: | This reminds me of a line from the movie Sneakers, by one of | the bad-guy-company stooges. | | It was something like, "Remember when computers used to be | fun?" | dralley wrote: | Don't forget ZIRP. Lots of startups are ultimately built on | selling dollar bills for 75 cents. | seneca wrote: | It's not cheating anyone when both parties knowingly agree to the | terms. This is just heavy handed regulation that destroys options | for workers and consumers. | CoastalCoder wrote: | But in this case, Uber/Lyft were breaking workers' _unwaivable_ | legal protections. | | It's analogous to saying that robbery at gunpoint isn't | "cheating", because both sides agree to the terms. Technically | it's not "cheating", but that's not the aspect most people care | about. | salamanderss wrote: | The Uber driver is basically a business owner fulfilling | contracts to customers brokered through an online | clearinghouse. They're hyper capitalists exploiting | regulatory advantages over taxi drivers then sad face at the | downsides to that. | throw_m239339 wrote: | > The Uber driver is basically a business owner fulfilling | contracts to customers brokered through an online | clearinghouse. They're hyper capitalists exploiting | regulatory advantages over taxi drivers then sad face at | the downsides to that. | | No they are not, otherwise they could freely set the fare | and the market would decide the final price, not Uber or | Lyft. Clearly that's not the case here. | jkaplowitz wrote: | Both parties did not knowingly agree to the terms. From the | article, quoting the office of NY Attorney General Letitia | James: | | > From 2014 to 2017, Uber deducted sales taxes and Black Car | Fund fees from drivers' payments when those taxes and fees | should have been paid by passengers. Uber misrepresented the | deductions made to drivers' pay in their terms of service, | telling drivers that Uber would only deduct its commission from | the drivers' fare, and that drivers were "entitled to charge | [the passenger] for any tolls, taxes or fees incurred," though | no method to do this was ever provided via the Uber Driver app. | plagiarist wrote: | Libertarianism, the perfect economic system in which nothing | can go wrong. | xchip wrote: | Bad use of the quotes, it looks like were the drivers who were | cheating, and it was Uber and Lyft. | salamanderss wrote: | Isn't Uber/Lyft a broker/market? Wouldn't it be the driver | cheated himself, or the passenger contracting the driver cheated | him? | dboreham wrote: | Labor laws say you can't declare the drivers to be corporate | entities. Presumably because employers would use that as a way | to circumvent employment law. | not_enoch_wise wrote: | And we would have gotten away with it, too, if it weren't for you | meddling regulations! | unethical_ban wrote: | Ars' title should have "cheating" drivers, or "cheating drivers | out of earnings", not "cheating drivers" out of earnings. | TrackerFF wrote: | When your business (model) is built around skirting labor laws, | you either become big and powerful enough to change those laws to | your own advantage, or you pay the piper when that time comes | around, and pivot/change your business model...or simply cease to | exist. | decafninja wrote: | Always love how any thread on Uber or Lyft inevitably contains a | debate about Uber/Lyft versus taxicabs and how someone's have had | bad experiences and vow never to use one or the other. | | Also inevitably someone chiming in about how cars in general are | evil incarnate and everyone must convert to public transportation | and bicycles. | mcbrit wrote: | ? | | You haven't engaged with even ONE concrete argument; ideally, | you would scan all arguments and engage with in good faith the | very best argument. Or alternatively just say: nope, not | interested. | | But you just strawmaned against nothing. Not so great. | lbrito wrote: | Never seen anyone classifiy personal cars as evil incarnate. | Extremely damaging to humans, inefficient and full of negative | externalities, yes. | | Alas this has nothing to do with the post. | j-bos wrote: | The quotation marks in the headline make it sound like uber lost | money to fraudulent drivers, rather than the actual story, the | drivers were the ones ripped off. | Vicinity9635 wrote: | Quotation marks in headlines normally mean they're quoting a | source. The disengenuous "scare quotes" are a recent | degradation in journalistic integrity, which ars isn't doing | here. | renewiltord wrote: | Do I understand this correctly? | | Customer pays $100 for service, Uber takes (say) $45 => Driver | allocation is $55. Uber now collects $10 tax from here and gives | the driver $45. | | That's wrong because the passenger should be paying the sales | tax. So the right way to do it is | | Customer pays $100 for service + tax, which is $90.91 service + | $9.09 tax. Uber takes (same ratio) $40.90. Driver allocation is | now $50.01. | | Okay, so the accounting was wrong here. That makes sense. Does | this mean that Uber will be going back to get that extra taxed | money back from the government if they paid it? ___________________________________________________________________ (page generated 2023-11-02 23:00 UTC)