The company is working to pay drivers it underpaid based on an accounting error.
Uber says it underpaid tens of thousands of drivers in New York City since November 2014 as a result of an accounting error. The company is now working to pay affected drivers an average of about $ 900 each, an amount Uber estimates to total of tens of millions of dollars.
The Wall Street Journal first reported the discrepancy.
How did this happen? Uber was charging its commission — 25 percent of the fare, on average — before deducting other fees, such as sales tax and black car fees. The company will now charge its commission on the net fare after all the other fees are accounted for. The result: A bit more for the driver, a bit less for Uber.
On a $ 10 fare, for instance, Uber previously took $ 2.50. Now, after deducting a 2.5% Black Car Fee, the 8.875 % sales tax, Uber’s take home will be $ 2.22.
Uber, now valued at $ 69 billion, realized its mistake early last week when it was rolling out a new pricing system that charges riders based on what Uber’s algorithms think they will be willing to pay.
As part of that new route-based pricing, the ride-hail company — which has faced increasing public scrutiny since the beginning of 2017 — also rolled out a more transparent trip report for drivers, which showed what they were being paid versus what riders were being charged as well as Uber’s cut. That was in response to critiques over the company’s lack of transparency over its upfront pricing — with which drivers complained they were being paid less than riders were charged.
Here’s a copy of the email Uber is sending drivers:
“We are committed to paying every driver every penny they are owed — plus interest — as quickly as possible,” Rachel Holt, the regional manager of U.S. and Canada, said in a statement. “We are working hard to regain driver trust, and that means being transparent, sticking to our word, and making the Uber experience better from end to end.”
So far, Uber believes this mistake was only made in New York, but the company is doing an audit of its other markets.
The head of the Independent Drivers Guild, a group that represents ride-hail drivers, is also asking regulators to investigate whether Lyft and other Uber competitors like Gett and Juno are doing the same thing.
“We also call for regulators to launch an immediate investigation into ride hail applications fare and payment practices in our city, including but not limited to the practice by Uber and other apps of charging commission on gross fares instead of net fares and the use of ‘upfront pricing’ by Uber, Lyft and Juno to create a secret surcharge above and beyond the commission agreed to by the drivers,” said Ryan Price, the executive director of the Independent Drivers Guild.
We’ve reached out to Lyft, Gett and Juno for comment.
This is developing…