Uber sued in LA, San Francisco for 'exaggerating' background checks
Uber was sued by prosecutors in San Francisco and Los Angeles Tuesday, adding to the popular ride-sharing startup's legal woes. The allegations against Uber include misrepresenting background checks on drivers, as well as charging passengers unauthorized fees for certain trips.
California prosecutors sued Uber on Tuesday over the ride-booking company's background checks of drivers and other allegations, adding to the popular startup's legal woes in the country and around the world.
The lawsuits filed Tuesday in San Francisco Superior Court are the latest legal hurdles to confront the nascent ride-hailing industry. The industry in general — and Uber in particular — have been battling lawsuits and regulatory issues over whether the businesses are regulated taxi services or app-making technology companies.
"Uber continues to misrepresent and exaggerate background checks on drivers," said Los Angeles District Attorney Jackie Lacey. "It's not our goal to shut them down. What we're saying is their advertising is false."
Lyft, on the other hand, agreed to drop similar claims that its background checks are the "best available" and the "gold standard." It also agreed to pay $500,000 and change some of its business practices to settle its own lawsuit, San Francisco County District Attorney George Gascon announced.
Among other concessions, Lyft agreed to submit its fare-setting app to the state regulators to ensure it's fairly charging riders, and it agreed not to do business at any airport unless it receives a permit.
Lacey partnered with Gascon in a probe of the ride-app industry. A third company — Sidecar — is still under investigation and could face a lawsuit of its own if it can't reach an agreement with prosecutors, Gascon said.
Uber uses information supplied electronically by its applicant drivers for background checks. But applicants can get around those checks by using stolen or false identifications, Gascon said.
Uber spokeswoman Eva Behrend defended the company's role in California in a statement that did not address specific allegations.
"Uber is an integral, safe and established part of the transportation ecosystem in the Golden State," Behrend said. "We will continue to engage in discussions with the district attorneys."
Uber also is being sued for charging passengers an additional $4 for trips to and from San Francisco International Airport even through the company lacks a permit to do business at the airport and neither Uber nor its drivers pay the airport fee.
The lawsuit also accuses the company of failing to obtain approval from state regulators on how drivers calculate fares.
Uber has endured negative attention about the actions of some of its drivers.
An Uber driver was arrested in San Francisco in September and charged with felony assault after allegedly using a hammer to attack and seriously injure a passenger who complained about a route.
In October, a Los Angeles woman reported that an Uber driver drove 20 miles out of her way and ignored her complaints and questions before stopping the car in a dark and deserted parking lot. She said the driver then locked the doors when she tried to leave. The woman reported that she escaped only after screaming. Uber refunded her fare.
Uber is fighting numerous legal and regulatory battles as it aggressively expands worldwide.
The city of Portland, Oregon, on Monday filed a lawsuit seeking to halt Uber's expansion in that city, arguing the company failed to obtain the proper permits.
A Nevada judge has temporarily barred Uber from operating in the state.
Overseas, a top official in India called for the service to be banned nationwide after one of its New Delhi drivers was arrested Sunday and accused of rape. Separately, Spain has barred the company's operation.
Nonetheless, San Francisco-based Uber raised $1.2 billion in its latest round of funding from venture capitalists, a sign investors aren't fazed by the legal woes.
The latest investment put a value on Uber of $40 billion.