Since last summer, Uber has sought to improve transparency by implementing "upfront pricing." Under the premise, a rider is informed of a ride's price range before entering a vehicle, based on traffic estimates, time and mileage. Ostensibly, it's a winning scheme that encourages more trust in the ride-share company, which has been besieged with a series of crises this year. In reality, as a new class-action lawsuit filed in a Manhattan federal court alleges, there's a discrepancy between what riders are being charged and how it's calculating driver pay, and it all comes back to the upfront pricing model.
Under the system, Uber X customers are charged based on routes that are less-efficient than the ones it's using to calculate what drivers are paid. As the suit alleges, the outcome of this paradigm is higher fares and the company is pocketing any leftover surplus on the fare directly from its customers, allowing it to amass an extra $7.43 million per month.
Fast Company obtained the suit, which states:
“Contrary to Uber’s representations concerning the ‘cost of the ride’ and the “actual fare” charged to Uber X riders via the Upfront Pricing model, Uber has charged Uber X riders a fare that is $1.98 higher on average than the ‘actual fare’, i.e., the fare incurred by the Uber X drivers for the ride."
The complaint was foreshadowed by a story reported by Bloomberg, in which Uber's head of product, Daniel Graf explained that the company is charging fares based on what its computer algorithms think people are willing to pay. The premise explained by Graf, called "route-based pricing" has fallen afoul of some critics who think it could possibly lead to more customer discrimination.
Being saddled with a legal action is nothing new to ride-share monolith, which is also fending off another class-action suit in San Francisco, alleging that Uber is ripping off drivers under the same upfront system. Another one leveling that very accusation was filed last month in Los Angeles. The pile-on is perhaps cemented by reports from Tuesday, which suggest Uber had underpaid drivers in New York City for years; the company has agreed to issue backpay to all those affected, with some estimates noting the total payout could near $40.5 million.
The suit filed this week in Manhattan court cites Jacqueline Gayed as the lead plaintiff. Gayed is married to an Uber driver and after conducting her own independent inquiry, she's been joined by over 100 customers who've signed on to support the complaint. Her findings coincide largely with those of the Rideshare Guy, an independent blog and resource for drivers.