Companies like Walmart, Sprint, and General Motors aren’t new to being villains. Bloated and bureaucratic, it’s easy to see why all three landed on 24/7 Wall St.’s list of the most hated companies in America, published in January.
But there was one notable new face on this year’s list that hardly fits that archetype: Uber. The ride-sharing company ranked number six, despite recently filing a $1.8 billion dollar investing round, bringing its estimated value to over $40 billion.
How is one of the most despised companies in America also on a meteoric rise? Because archaic regulations that protect cab companies and prevent new competition set the bar so low, that even one of the most hated companies in America does a noticeably better job.
Dude, where’s my cab?
My own experience with cabs has been a comedy of errors, minus the comedy.
On New Year’s Eve 2013, I called a cab before 11:00 p.m. knowing I’d want to leave shortly after midnight from a bar near downtown. When the cab finally got there at 4 a.m., four of us had fallen asleep on the floor of a friend’s apartment, and I missed the call. I’m blacklisted from that cab company now.
It’s a fact: Taxis aren’t meeting their demand, or even close to it.
The other night I tried out Curb, the app that Portland, Oregon taxi companies encourage riders to use instead of Uber. The app didn’t place my location correctly, leading the driver several blocks away, where she had to call me so we could find each other. When we arrived, the app hadn’t properly tracked my ride. Neither the phone payment nor point-of-sale system worked, so she typed the fare manually into a Square. In the end, I was charged twice for the ride and had to cancel one with my bank when I couldn’t reach the cab company for support.
Those are just personal anecdotes, but statistically speaking, I’m not an anomaly. It’s a fact: Taxis aren’t meeting their demand, or even close to it.
A Boston city report found that “in large areas of Boston, the chances of getting a taxi within 20 minutes are less than 50 percent between 6 p.m. and 3 a.m.” The odds of getting a cab within 20 minutes between midnight and 3 a.m. fall between 10 percent and 30 percent.
Despite standardized cab fares, even the city admits there are often hidden fees for customers and drivers that aren’t clearly explained, or improperly charged.
But high fares, unclear charges, and long wait times are only problems for the customer. Although cab drivers often protest Uber at the behest of companies they work for, they’re victims, too.
Drivers get screwed, too
Every cab driver has to go through a rigorous and sometimes expensive process before taking the wheel. Background checks, multiple vehicle inspections every year, strict fare regulations, and a series of classes and tests are all part of the game. Which means cabbies aren’t the ones benefitting from the current system; it’s the cab companies.
The cab companies want their money, and if drivers complain, they’ll be quickly dismissed or taken off the active roster.
In Boston especially, the medallion system creates a strictly limited market where drivers are forced to lease from a company that often treats them unfairly, and is quick to fire anyone who doesn’t pay outrageous, and sometimes illegal, fees.
Taxi companies make a mint charging drivers for the opportunity to use their vehicles and licenses, so much that sometimes a driver won’t have paid off their obligation to their dispatch until halfway through their shift, if at all. To make matters worse, drivers complain that fees for hybrid cars are higher, offsetting any money they would save on gas.
Cabbies also pay a premium to “rent” the newer cars in a fleet, with owners frequently charging that premium well past the legal date when they’re allowed to do so. When he went undercover in April of 2013, a Boston Globe reporter found that “Boston Cab owns at least 75 2009 Camrys, which means the company could have reaped more than $165,000 since Jan. 1 through improper surcharges.”
The cab companies want their money, and if drivers complain, they’ll be quickly dismissed or taken off the active roster. When drivers brought complaints to the Hackney police department that manages for-hire transportation, they told them to bring in a victim, but none will come forward for fear of losing their job.
Both the Portland and Boston reports found that cab drivers make very little on a per-hour scale, usually working 12- to 24-hour shifts, more than five days a week. Uber reports on partner earnings found that in New York City, Uber drivers make, on average, twice as much per hour as traditional cab drivers. That’s an astounding pay gap, even before you consider that Uber partners set their own hours, are their own bosses, and pay a percentage of what they make to the company based on how much they bring in, rather than a flat fee that they might not get to in a day of working.
Uber is no angel
Uber might not be as bad as cab companies, but its own record has plenty of blemishes.
On the company’s Better Business Bureau page, where it received an F, there are more than 200 customer complaints. Most complain of high fares, sometimes hundreds of dollars, with riders claiming they had no idea the rate would be so high, or that they were told the estimated fare was much lower. Uber has responded to all but 15 of these complaints at publishing time, offering a 25 percent discount on the ride, or a full refund of the surge rate.
It didn’t take long to find examples of road rage, violence toward customers, sexual assault, and human trafficking.
That’s a totally fair complaint, if customers have been genuinely misled. But it would take a pretty big lapse in attention to miss Uber’s warning on surge pricing.
The app first shows you an estimated fare for your trip, as well as the multiplied rates for both travel distance and time, and requires you to confirm that’s what you’ll be charged by tapping a button that says “I accept higher fare.” If the rate is higher than two times the normal fare, riders are required to enter the surge rate into a text field manually before booking. When they’re presented with a ride-hail confirmation, they’re reminded of the rate and given another opportunity to cancel.
Look through the Better Business Bureau complaints, and you’ll spot a common thread: Many occurred at surge rates, and frequently on holidays like New Year’s Eve, or on a Friday or Saturday night, between midnight and 3 a.m. That may explain why riders don’t remember confirming the rate; I know I’ve taken a cab home after a night out that I don’t remember paying too much for. Charging drunks too much for a service may be bad business, but it isn’t illegal, especially when they clearly agree to the rates.
Granted, not all of the complaints are of this nature. Some riders also complain of drivers that never picked them up and charged anyway, or rude drivers who got angry at customers or other drivers and abandoned them somewhere halfway through the fare. Uber claims to have responded accordingly, but unlike the surge rate refunds, it’s unclear what the decision was. Lyft is a bit more transparent with customer complaints, usually dropping drivers from the program whose rating drops below 4.6 out of 5.
Unfortunately these aren’t new incidents to for-hire transportation, and have been a known issue with taxi cabs for as long as the work conditions have been as poor as they are. A study by the city of Portland, Oregon pointed to the fact that drivers pay huge “kitty” fees for permits, dispatch and other services, and work hours that are too long, as the direct causes for rude drivers and customer service issues.
People always say Uber is unsafe, that the drivers aren’t properly vetted, or the cars could fall apart at any second, but taxi drivers have a pretty bad rap themselves. When I set out to prove this point, it didn’t take very long at all to find dozens of examples of road rage, violence toward customers, sexual assault, and human trafficking.
Just drop me off anywhere
You wouldn’t convene all the newspapers in town to ask whether another newspaper would be too many, but that’s essentially what happens when Uber asks for permission to operate in many new cities. Surprise! They don’t want new competitors.
In the end, what’s at stake is turf, and the cab companies know it. Heavy regulations help them keep competition out, but the same regulations are also to blame for the dismal state of for-hire transportation today.
By standardizing private for-hire transportation regulations so that both ride-sharing programs and taxis compete side by side, cities will improve quality of life for Uber and traditional cab drivers, promote healthy competition between companies, and raise the standards for drivers across the board. At the end of the day though, it’s just about making sure everyone makes it home safe and sound.
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