Uber’s inadequate background checks for drivers has cost it $10M

Thursday’s settlement concerns the ride-hailing company’s operation in San Francisco and Los Angeles and was the result of a consumer protection lawsuit filed in 2014.

Uber has to pay $10 million within 60 days, with the payment likely to be split equally between the two cities. Should it fail to comply, the amount will automatically increase to $25 million, the LA Times reported.

George Gascón, one of two district attorneys that filed the lawsuit, said Uber had been making unreasonable claims about the robustness of its background checks on new drivers, checks the company had trumpeted as “industry leading” and “the gold standard.”

The attorney claimed the checks were “completely worthless” as they didn’t even involve fingerprinting new recruits when checking for past convictions, something most taxi companies have long done, adding that by repeating the “misleading” statements, Uber was “giving consumers a false sense of security when deciding whether to get into a stranger’s car.”

During the case proceedings last year, Gascón and district attorney Jackie Lacey claimed Uber’s procedures, which include the examination of county, federal, and multi-state criminal background records, resulted in the company missing criminal records for 25 Uber applicants in San Francisco and Los Angeles. They said this was partly down to Uber ignoring a database of around 30,000 registered sex offenders, and also because the checks only cover the preceding seven years.

Uber said it’s already stopped claiming that its background checks are the best in the industry following the settlement of another case in February, and says it also made improvements to its vetting procedures.

The LA Times described Thursday’s settlement as “relatively small” and “something of a coup” for the company, which today is valued at $62.5 billion.

Commenting on the court’s decision, an Uber spokesperson said, “We’re glad to put this case behind us and excited to redouble our efforts serving riders and drivers across the state of California.”

Responding, Gascón said Thursday’s outcome goes “well beyond its impact on Uber,” adding that “it sends a clear message to all businesses, and to startups in particular, that in the quest to quickly obtain market share, laws designed to protect consumers cannot be ignored. If a business acts like it is above the law, it will pay a heavy price.”