
Uber Plans Millions in Back Pay After Shortchanging NYC Drivers - rayuela
https://www.bloomberg.com/news/articles/2017-05-23/uber-said-it-shortchanged-nyc-drivers-will-pay-out-millions
======
chipgap98
That's a huge "bug" not to notice for presumably a long time. I recently had a
Lyft driver in NYC talk to me about how he quit uber after doing the math on
what his fare should have been when a passenger told him how much they were
being charged. He brought it up to uber and then quit when they didn't fix it.
Anecdotal story but seems extremely relevant now

~~~
potatolicious
What your driver was talking about may not be a bug/math error like stated
here.

After rolling out guaranteed whole-ride pricing (as opposed to metering) Uber
is allegedly testing algorithms to bid different prices for rides to both
driver and passenger. i.e., passenger sees a fare of $X, while driver sees a
fare of $Y, where presumably $Y < $X.

Passengers' fares can be "optimized" by estimating a specific passenger-trip's
price ceiling, and driver payments can be "optimized" by estimating the
driver-trip's price floor.

To be clear, I find this entire concept incredibly abhorrent, but apparently
this is being trialed.

[1] [https://nakedsecurity.sophos.com/2017/04/10/uber-showing-
dri...](https://nakedsecurity.sophos.com/2017/04/10/uber-showing-drivers-and-
riders-different-fare-estimates-says-lawsuit/)

~~~
criddell
When I read about stuff like this and also how Uber is losing a lot of money,
I have to wonder if maybe there's a fundamental problem with their business
model.

~~~
leggomylibro
There is; they are hemorrhaging money, and only manage to stay afloat because
of the billions of dollars being shoveled into the furnace by investors and
nation-states. In a way, venture capital is subsidizing your rides.

They're not insane, though. They're buying market share and betting that they
can pull self-driving cars into their fleets while they still have the market
on lock. Without having to pay drivers or deal with their whiny attempts to
enforce employment laws (against an app! Crazy,) they see themselves being
able to print money hand over foot.

This is how you get away with being a dirtbag, in any situation. Move very
quickly, and get to where you're going before anyone manages to claw you back
far enough. Possession seems to be 100% of the law, when it comes to companies
in this country.

~~~
aetherson
Let's be clear that "they're buying market share and betting that they can
pull self-driving cars into their fleets" thing is revisionist history. Nobody
who invested billions in Uber years ago was told, "Our plan is to burn your
money and win driverless cars." They didn't even have a driverless car program
until about two years ago.

Uber thought that they had a viable business model based on human drivers, and
that their markets would settle down into profitability once they established
market share. They were wrong. They thought that they could successfully
expand into a logistics business -- that was a big element of their redesign,
which only landed 6 months ago, for god's sake. Now you never hear about
logistics (because the only people who might conceivably want Uber-for-
packages, Amazon, just went ahead and built the service in-house).

So now they're saying that they're a big bet on driverless cars.

~~~
Balgair
I can't find the post, but there was a 'UBER finance guy' (self-claimed) on HN
a few weeks back that 'spilled the beans' and quit on what Uber is actually: a
sub-prime auto loan company. Again, this is my recollection, take it with
salt. It goes like:

Driver (D): I want to drive for Uber!

Uber (U): Sure! Do you have a car that is safe and less than 5 years old? (I
have no idea what the car reqs. are)

D: No

U: Ok, well, we can loan you one! Just sign this!

D: Great! I signed! What are the loan repayments like?

U: Well, you owe us, per the __3 year contract __, $100 /week (I have no idea
what the actual loan terms are like, but 100 is a nice round number so lets
use that)

D: Ok! That's not bad!

U: It gets better! We'll just auto-deduct the money you owe us from your
driver's account, after that, all the money is yours! You don't have to worry
about any of it, just drive for us, we'll take care of it.

D: Cool! What happens when I get sick or something and can't drive?

U: Well, then you still owe us the money, plus a 10% fee on that week's loan
payment (again, I have no idea what the loan agreement is like, YMMV) that
we'll automatically tack on to the _next_ week's loan payment.

-A week goes by-

D: Oh man, the weather was great this week, not a lot of people needed me to
drive them around! I only made $90!

U: Ok, well, per the loan agreement, you owe us $10 more then (100-90=10),
plus the 10% late fee, making your next week's payment $100 + $10 + (0.1 x
$100) = $120.

D: Oh man! I better hope that the weather is bad so people want to take an
Uber that I am driving!

-Another week goes by-

D: The weather was really rainy, but even still, I only got notifications to
pick up $90 worth of people! Not again!

U: Well, now you owe us $120 - $90 = $30 plus the 10% late fee on the $120,
making your next week's payment $100 + $30 + (0.1 x $120) = $142.

D: Well, darn, I thought a lot of people wanted to take Ubers! All my friends
take them! But I don't get enough notifications to pick people up from Uber!

U: We know. We are the people that are giving you a loan and simultaneously
are the ones that control how much of that loan you can pay back because we
are the ones that tell you how many people you pick up and we also set the
'surge' rates and regular rates that we tell you. Also, we have something of a
history of acting in morally reprehensible way without shame.

D: Wait, what did you say?!

U: Nothing! Nothing at all! Get back to driving! That car we bought isn't
going to pay itself off, you are!

~~~
aetherson
I'm as negative as the next guy on Uber, and that's a great narrative, but
they are losing vast quantities of money. Any dastardly deed that they do has
to square itself with the fact that they are losing vast quantities of money.

A predatory auto-loan company is not a $70B business.

~~~
yeukhon
I said this before, Uber should seriously consider closing down its operation
in other countries. It is expanding virtually exponentially (they have a huge
engineering team) for the type of company they are running. They need to focus
on the U.S. market. They are losing way too much money everywhere combiend.

~~~
jorvi
Microsoft did this with the Xbox One (almost all the extra features they
advertised were US only) and it completely destroyed their market share,
making the PS4 sell 2-to-1. WhatsApp went the other way (the US doesn't
matter, you want the global market) and it got them a $19 billion sticker
price. The US is _a_ market, not _the_ market.

------
robbyking
This is the same company whose founder "took the tax dollars from employee
paychecks — which are supposed to be withheld and sent to the Internal Revenue
Service — and reinvested the money into the start-up, even as friends and
advisers warned him the action was potentially illegal." [1]

[1] [https://www.nytimes.com/2017/04/23/technology/travis-
kalanic...](https://www.nytimes.com/2017/04/23/technology/travis-kalanick-
pushes-uber-and-himself-to-the-precipice.html)

~~~
greenyoda
It's not _potentially_ illegal, it's _unquestionably_ illegal. Money withheld
for taxes doesn't belong to the employer; it has already been paid to its
employees, who are trusting the employer to pay it to the government on their
behalf, as required by federal and state law. So it's (1) stealing from
employees and (2) tax fraud. If the authorities had found out about it, he'd
have gone to prison.

~~~
misiti3780
in a previous life, i worked for someone (small start up) that did exactly
this to me. I reported him to the authorities, and he is not in prison. I
depends on the size of the amount stolen and how busy your local DA's office
is.

I was in NYC.

------
danso
This is not a hard error to identify (seems like one that's harder to make, if
Uber employs qualified accountants), and given the number of Uber drivers who
carefully and calculatingly join Uber as a way to become financially
independent, it's hard to believe that no one discovered the problem and then
complained. But maybe someone inside Uber felt more confident in prioritizing
this issue after the public shitshow that Uber has been eating this past few
months.

------
anigbrowl
Relevant self-link on corporate wage theft:
[https://news.ycombinator.com/item?id=14380908](https://news.ycombinator.com/item?id=14380908)

This is another example of why I think developers need to professionalize the
industry and set ethical standards.

Why do people willingly write code to automate the process off ripping off
their own co-workers to enrich shareholders? Because if they don't, someone
else will.

Maybe it's time to stop being developers and start being engineers. Ask
yourself who benefits from software development being an ethics-free zone?
Most likely, it's not you.

------
rajathagasthya
> While drivers’ pay is determined according to the time and distance they
> travel, Uber has begun to experiment with how it calculates the price for
> riders.

I don't get this. How can you "experiment" with price calculations?

~~~
SonicSoul
aren't all prices determined via some sort of market testing?

~~~
rajathagasthya
That may be true, but I assume Uber commits to paying drivers $X per mile or
hour or something similar (as stated in that article). Surely, you won't drive
for Uber if you don't know exactly how much money you make and if it's always
subject to changes and experimentation?

~~~
callalex
People only drive for Uber if they have to in the first place, so now they are
testing exactly how much of a beating drivers are willing to take before they
leave. They already know the answer is "a lot" so they'll keep on pushing.

~~~
jessriedel
> People only drive for Uber if they have to in the first place

This is completely opposite my anecdotal experience. When I ask uber drivers
why they drive for uber, the majority say they left a previous job for uber
because of the money/flexibility/less-stress.

------
salesguy222
Haha wow, meanwhile at Oracle, having our commissions miscalculated by a team
of experts is a feature, not a bug.

And somehow those miscalculations are NEVER in our favor, and always result in
delayed payment.

It's like working for Crytek, but even worse.

~~~
Bakary
What's specifically bad about Crytek?

~~~
salesguy222
In addition to what the poster below me said, they treated certain employees
as second class citizens and played a lot of shell games involving overtime
and even salary.

Basically they weren't very forthcoming to their Bulgarians when money dried
up, opting to create a hunger games situation instead of asking for help and
patience

------
wehadfun
Uber drivers could go on strike from Uber and still earn by driving for LYFT.
They could demand what ever they want.

~~~
smt88
You can't strike without a union, and Uber is fighting hard against drivers
unionizing.

~~~
nradov
The drivers are vendors, not employees, so there's no way for them to form a
union or go on strike. But there's also nothing stopping a group of drivers
from getting together and collectively agreeing to stop driving for Uber.

~~~
anigbrowl
So form an 'association' or something. If you're dealing with a company that
reflexively breaks rules you're under no obligation to worry about niceties
like union certification requirements and procedures. there is no moral
obligation to play fair with a known cheater.

~~~
nradov
There are no legal niceties even needed. Uber drivers in the USA wouldn't be
breaking any labor laws by forming a voluntary association.

------
robbiemitchell
This reminds me of how Seamless (now merged with GrubHub) took its percentage
cut (~10-15%) of every meal delivery order after including taxes AND tip! That
was as of a few years ago dating all the way back -- not sure whether it's
still going on.

------
jsemrau
It was painfully obvious already a long time ago that Uber uses the investor
money to purchase the market[1]. For any Asian and European city I have ever
lived in the calculation never worked. And I still believe it would have been
better to just give the Billions to the several taxi companies and have them
build a better app. Maybe even work with the car companies and have them build
this functionality in their cars from scratch.

[1] [https://medium.com/@thisTenqyuLife/nobody-will-talk-about-
ub...](https://medium.com/@thisTenqyuLife/nobody-will-talk-about-uber-
in-5-years-cd372981c85a)

------
Bakary
I wonder if it's confirmation bias but I'm starting to think that the model of
an army of disenfranchised workers jumping through hoops to serve a small
professional elite will soon become the norm.

------
rbobby
Uber's management team seems to stumble from one mistake/mess/self-inflicted-
injury to another. I can't help but wonder why Uber VCs have kept them in
place.

~~~
Applejinx
It's not unlike the Enron model. Uber is supported entirely by the collective
opinion that they're a SV unicorn and the most ruthlessly profitable thing
around.

If a vote of no confidence is issued by the Uber management team being fired,
the valuation would collapse because it would be an admission that ultimate
ruthlessness/evil/whatever you want to call it, does not automatically become
ultimate profitability and capital return.

Of course the VCs have to double down. They have no choice but to conclude
that Uber's behavior is a model for future business everywhere. It doesn't
matter if it's an absurd conclusion: capital is literally at stake. Uber's
valuation can only go up or burst. Everybody invested in it strongly prefer
the 'go up' option.

~~~
rbobby
> valuation can only go up or burst

I think you're right. The VCs are now hostage to their own greed.

------
51Cards
What I find interesting is how is this localized to one area? Is it an error
in NYC tax law calculations or something? Seems that they are talking about
the base fare calculations and you would think those would be somewhat general
across several areas. Even if they run multiple algorithms some other city
must be running something similar with the same error?

------
surds
The valuation argument always leads to 'driverless' cars.

Makes me wonder - if all cars can be 'driverless', why would you prefer to
call for an Uber and not use your own?

~~~
bduerst
Your question assumes that Uber's market share as a ride-hailing app will
somehow benefit them as a self-driving car company.

------
funkyy
Uber, with its history of fraud, will get huge bills in near future. While the
company was acting as not caring about anyone, will get bitten by governments
and unions soon for it. You cannot disturb the whole world like that. You need
to obey laws and try to change/lobby them, rather than break them.

~~~
joering2
It continues to boggle my mind, day by day, who really Travis know or is
related to?? Is he family of Clinton, Bush, Trump himself??

I mean any one of us deciding to provide a framework for any workers, take it
taxi riders, that are very tightly regulated by something called US Government
(that has a law on books to not only jail you but take your life away from you
[capital punishment] and do it legally) and many US gov branches, and said:
"screw rules, regulations, tax law, insurance law, safety laws, screw them all
- download app, provide service, make money" would long time ago be jailed
without parole, all accounts frozen, passport withhold, house raided by
FBI/SWAT and all relatives cross-questioned.

Who the heck is this guy.. or who/what does he know????

~~~
self-diversity
I wonder how hard it would be to determine the reliability of using extraneous
punctuation as a signal of unhinged prose.

~~~
jjawssd
Can you address his point?

------
true_tuna
Interesting to note that this came about due to a lawsuit. Meaning, somebody
noticed, brought it to Uber's attention, got brushed and was forced to resort
to hiring lawyers.

------
BoiledCabbage
This company is absolutely astounding.

The objects you hold up as ideals says a lot about the culture of your
environment and its values. It is extremely disappointing that Uber is
considered a crown jewel of Silicon Valley.

~~~
iamdave
_It is extremely disappointing that Uber is considered a crown jewel of
Silicon Valley_

The common refrain I hear is "they're better than taxis" and more and more
evidence is mounting against them (at the corporate level) that suggests: no,
they really aren't.

~~~
DoofusOfDeath
I think you're both right and wrong.

Uber is better than taxis for riders, and worse than taxis (in some ways) for
drivers.

Also consider that some Uber drivers couldn't realistically become taxi
drivers in their spare time, and perhaps some of them would prefer to be
underpaid by Uber rather than not working at all.

~~~
gaius
_worse than taxis (in some ways) for drivers_

... and taxpayers. Someone else pays for the upkeep of those roads, without
which their business could not exist. In the UK, someone else pays for the
healthcare of their drivers, as they dodge Employer's NI. Etc etc.

The entire business model of "disruption" is pocketing what everyone else pays
for the dependencies and externalities.

~~~
SilasX
>Someone else pays for the upkeep of those roads, without which their business
could not exist.

Everyone pays gas taxes that scale with the amount driven and therefore their
use of the roads. Any unusually high driving would be made up by the higher
gas consumption and the resultant taxes thereon.

If anything:

1) Taxi routes are concentrated in cities, where they have lower miles per
gallon and thus pay _more_ taxes per mile driven than the typical car. (Edit:
and city roads probably have lower maintenance costs per ton-mile due to not
having to drag people out as far to maintain it and related factors.)

2) Maintenance costs on roads are almost entirely due to cargo trucks, not
sedans, since road damage scales with (something like) the fourth power of
weight per axle.

Side note: why is it that every time there's an unpopular big player, everyone
finds a way to label any publicly provided good as a subsidy to that player?
It's not just this but "arresting shoplifters is a subsidy to Walmart",
"public roads are a subsidy to Amazon", "public infra is a subsidy to
Netflix", "navies are a subsidy to shipping".

> someone else pays for the healthcare of their drivers

No, the government collects income taxes from everyone to provide universal
health care through the NHS. Uber's drivers pay the social insurance taxes on
their income. The fact that it isn't billed to Uber _specifically_ is
irrelevant. Lloyd's isn't billed for the NHS taxes on the couriers that drop
them packages, but that doesn't mean Lloyd's "dodges employer's NI".

If your point is that they should be so assessed because they're really
employers, not clients, that's economically questionable too -- the burden of
a tax is independent of who you assess it to; if one day they forced Uber to
pay NI, they could just cut payments to drivers to cover the tax, since all
the income streams would be unaffected. Same effect as if they started
assessing VAT by charging customers as they leave the store instead of taking
it from retailers.

[https://en.wikipedia.org/wiki/Tax_incidence](https://en.wikipedia.org/wiki/Tax_incidence)

~~~
gaius
_No, the government collects income taxes from everyone to provide universal
health care through the NHS. Uber 's drivers pay the social insurance taxes on
their income._

You've clearly not researched just how much Employer's NI is. It's a lot more
than an employee pays.

It's clearly not a subsidy if a company is paying their fair share in taxes.
Also here in the UK we have workers on income support (welfare) because their
employers underpay them... That is quite literally a case of the public purse
subsidising a private enterprise.

~~~
SilasX
>You've clearly not researched just how much Employer's NI is. It's a lot more
than an employee pays.

If it works anything like the US, there is a portion[1] assessed to the
employer and to the employee. If you report income as an independent
contractor/self-employment, you pay both sides of it (since otherwise people
would artificially class themselves as contractors to pay less). Are you
saying Uber drivers in the UK aren't paying that, or that UK law allows that
loophole?

>Also here in the UK we have workers on income support (welfare) because their
employers underpay them... That is quite literally a case of the public purse
subsidising a private enterprise.

So, it's not Uber-specific, just the general argument that all low-wage labor
(below some threshold) is inherently subsidized because you qualify for public
assistance at that level.

[1] economically pointlessly, I might add

~~~
gaius
_since otherwise people would artificially class themselves as contractors to
pay less_

That is exactly what they do do. IT, media, even public sector, it is rampant.
The Inland Revenue keep trying to crack down on it but contractors are very
sly about it and always find a loophole to technically meet the requirement as
if they were a genuine small business.

~~~
beojan
Well, they also lose the right to paid holiday, sick pay, not be fired at
will, and so on.

~~~
TeMPOraL
And so they do. Speaking from what I see in Poland, you can divide people
going "contracting" into two groups: in industries like IT, it's an easy way
to get ~20% bigger salary than you'd otherwise get in a similar position. In
low-skilled industry, it may be the only way you'll get a raise (or even a
job), so people don't have much choice.

------
NelsonMinar
It never stops with this charming company, does it? This cavalcade of illegal
and unethical behavior at Uber is what happens when the founder and
untouchable CEO of a company is a bad person.

~~~
Applejinx
Define 'bad'. Or indeed 'ethical'. There's an awful lot of abstracted money
around that sees (to the extent abstractions can see anything) Uber and its
boss as the best thing ever, specifically because all the behavior is designed
to increase money.

If all that energy was put towards a goal of tormenting red-headed pipe-
fitters and their families, there's no way things would have gone on this
long. But it's to increase money, so by definition UNTIL it fails and all the
money is lost, it's not simply okay but admirable and to be emulated.

If the money buys immunity from any such accountability…

~~~
NelsonMinar
I used to work at Google in the "Don't be evil" era. We had many internal
discussions about how it was hard to define "evil". That's part of the purpose
of the deliberately ambiguous statement, to state a general principle without
getting bogged down in minutiae. The purpose of the guidance is to force
people to have ethical discussions, not to answer the question.

Uber is going to collapse under the weight of all its illegal and unethical
behavior. All that money is going to evaporate.

------
easilyBored
Move fast and break things. Break laws, steal, cheat and stuff. It's OK if
you're big enough and are a "startup."

~~~
dang
We've asked you before to stop posting unsubstantive comments to HN. If you
continue to do it, we will ban you.

------
tomkit
I'm breaking a 4 yr HN commenting-hiatus to post this: it's a bit
disappointing to see how the quality of HN comments has deteriorated over the
years. Virtually all the comments I'm seeing here are sensationalist
sentiments/anecdotes, backed with no facts, reverberated in an echo chamber.
This is a plead to the HN moderators to continue to iterate on your product to
improve the quality of the comments.

~~~
smcl
I think the use of "product" here is a bit of a stretch, and what "moderators"
are you pleading to? AFAIK it's only dang, and I'm not sure what we can expect
him to do when the criticism levelled at him is "the comments aren't as good
as I remember"

Also worth remembering is that when companies as polarising as Uber are in the
news, there's gonna be heated discussion with lots of strong opinions and
anecdata. No amount of moderation can avoid that

~~~
passivepinetree
I believe dang isn't the only one. Isn't sctb (just from the top of my head) a
mod as well?

