Uber Sued by San Francisco, Los Angeles Prosecutors

Updated on

Uber Technologies Inc. falsely assured customers that it used “industry-leading standards” to vet its drivers while failing to use fingerprints to check criminal histories, two California prosecutors alleged in a lawsuit.

Lyft Inc., a competitor to Uber’s app-based, on-demand car service, agreed to pay $500,000 and refrain from misrepresenting its driver vetting process to resolve similar allegations, San Francisco District Attorney George Gascon said today at a press conference.

Gascon and Los Angeles County District Attorney Jackie Lacey filed a consumer protection lawsuit against San Francisco-based Uber alleging the company routinely touted rigorous driver screening that went beyond local requirements to justify a $1-a-ride safety fee when in fact taxi drivers by law undergo more comprehensive background checks that include fingerprinting.

Instead of using fingerprint samples from prospective drivers to verify any criminal history, Uber relies on drivers to submit personal information online and then contracts with a private company that performs background checks. Without fingerprinting, the vetting is “completely worthless” because it doesn’t ensure that the information provided is actually associated with the driver, Gascon said. The company stopped using the term “industry-leading standards” in October.

The lawsuit is a rebuke to Uber on its home turf as the company faces opposition in cities across the globe over regulatory and safety issues.

Uber’s practices are “giving consumers a false sense of security when deciding whether to go in a stranger’s car,” Gascon said.

Airport Fee

Uber also fraudulently charged a $4 airport toll fee for trips to San Francisco International Airport even when its UberX service drivers weren’t paying anything to the airport because they don’t have permission to operate there, Gascon alleged. The lawsuit seeks a court order blocking Uber from making false statements about driver checks, restitution to consumers for fees and civil penalties of $2,500 for tens of thousands of violations, he said.

“Uber has met with the district attorneys to address their concerns regarding airport operations, the uberPOOL product, background checks, and operation of the app,” Eva Behrend, a company spokeswoman, said in an e-mail. “ We will continue to engage in discussions with the district attorneys.”

The prosecutors warned both companies in September, along with Sidecar Technologies Inc., that they would face legal action if they didn’t change their operations. Gascon said he is still in talks with Sidecar.

The lawsuit against Uber was filed on behalf of the state of California in state court in San Francisco.

“After months of productive conversations, Lyft has entered into an agreement with District Attorneys of San Francisco and Los Angeles that demonstrates our shared commitment to consumers and innovation,” Erin Simpson, a Lyft representative, said in an e-mail.

Portland Lawsuit

Portland, Oregon, yesterday sued Uber to stop its operations, saying the company violates city laws because it and its drivers don’t have permits to operate. Portland joined other cities including Rio de Janeiro and New Delhi where officials have moved this month to block the mobile car-booking company.

Uber has grown rapidly since starting in San Francisco in 2010. It’s now available in more than 250 cities around the world and last week raised $1.2 billion in funding, increasing the company’s $17 billion valuation in June to $40 billion.

Lyft, also based in San Francisco, this year raised $250 million in financing and has rolled out in 68 cities in the U.S., including New York earlier this year.

The case is California v. Uber Technologies Inc., CGC-14-543120, California Superior Court, San Francisco County.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE