A consumer’s guide to Uber: on-demand service comes with risk

Rights, News

On-demand car service apps are increasingly popular, with companies like Uber, Lyft and Sidecar expanding their services and customer base quickly across the U.S. and beyond. This rapid expansion often hits roadblocks — existing taxi and limousine companies trying to protect their market share, and the powerful unions that stand behind them. Legislators have tried to clarify laws and, in some cases, enact bans on the new start-ups, citing insurance regulations and safety concerns.

The changing laws, bans and petitions add up to consumer confusion about the legality and risks of using an app like Uber. Here we discuss where Uber operates, how it launches in a new city, drawbacks, consumer opinion, and what you need to know about this popular service.  

What is Uber?

Uber is a service app for smartphones that connects people who need a ride with drivers near them. Since launching in 2009, Uber has grown rapidly, threatening to put existing taxicabs and car service companies out of business.

Depending on the market, there are several types of Uber services. The two most common are UberBLACK, which guarantees a luxury town car with a professionally licensed chauffer, and UberX, which guarantees a nice vehicle and a personally licensed driver.

The benefits of Uber include shorter wait times, better customer service, and user-friendly ordering and payment processes. However, downsides include a lack of driver regulation and, consequently, possibly dangerous drivers.

Where does Uber currently operate?

Uber is already a worldwide company, operating in over 100 cities and 39 countries including the United States, Japan, England, France and the United Arab Emirates. Check to see if Uber is available in your city.

What does Uber do to launch in a new city?

To launch in a new city, Uber implements a six-week process involving two development teams, each with distinct functions. The first team recruits commercially licensed drivers by calling car and taxi companies and advertising available positions. The second team handles social media and publicity outreach, including posting online about Uber’s presence in the city and holding exclusive launch parties.

Unlike taxi and limousine services, Uber does not own vehicles; the company simply connects riders with drivers and facilitates payment. However, most city and state laws were designed around the established car service models, so Uber must negotiate with local lawmakers on a case-by-case basis, sometimes working to update existing laws.

In the process, the company has experienced major backlash from various state and local governments. Miami only recently allowed UberX to launch, and Houston feels that the pressure Uber is putting on the city is too aggressive.  Virginia’s was the most recent government to send a cease and desist letter to Uber, asserting that Uber was operating without proper authority. Uber executives replied that they were following the applicable rules and continued to operate.

In some cities, Uber also faces powerful transportation labor unions, often with long histories of working with local lawmakers, which view Uber as a major threat to their business.

Uber has navigated these difficult power dynamics and opposition by encouraging consumers to show support and write city officials. In Washington, D.C. this strategy resulted in over 50,000 emails and 37,000 tweets in support of Uber.

Drawbacks to Uber

While specific legal rules governing transportation depend on the city, a common issue facing Uber is lack of insurance. Some UberX drivers have personal car insurance that may not cover them fully in the event of an accident.

Another issue is the depth of the background checks that Uber performs on potential drivers. Uber does not require fingerprinting, a drug test, sex-trafficking awareness tests, or a defensive driving course, all requirements of New York City taxi companies. There have been complaints against Uber drivers, including allegations of sexual harassment, kidnapping and rape.

In addition, Uber has a policy called surge pricing — at high-demand times, the listed price of hiring an Uber car goes up significantly — which is the one Uber feature to spark significant consumer backlash.

The higher price, a draw for many potential Uber drivers, is something that taxi and car services with a constant rate cannot compete with. To even the playing field and take advantage of this supply and demand model, Washington, D.C. council members Mary M. Cheh and David Grosso have introduced legislation to allow taxi services to utilize surge pricing as well. According to the legislation, this would only apply to riders who sought to book a ride online or by mobile phone. It would provide upfront rates and allow for price comparison.

Why consumers love Uber

Most consumers love Uber for its convenience, great customer service, and for increasing their transportation options.

Without competition to encourage better performance, taxicab and limousine companies could previously monopolize the ground transportation industry. Taxi drivers in New York, for example, are famous for being rude and refusing to give rides.

With Uber, transportation services have to work harder to compete for business in a free-market system that generally works in favor of the customer.

What consumers need to know

Consumers need to know that, according to Uber’s terms and agreements, Uber is not responsible for anything that happens to passengers while they are using Uber.

It is also important to realize how easy it is to become an Uber driver. As a result, safety largely depends on the rider’s knowledge of Uber’s safety features.

The main safety feature is that once a ride has been booked, Uber sends a photo of the driver, shares the license plate number and includes a description of the car, so riders know what to look for. Uber urges customers to never get into an Uber car they did not order. Additionally, there is a button on the app that can, without alerting the driver, send recipients an estimated time of arrival so friends or family can track a passenger’s progress. Passengers should consider using this feature whenever they get into an Uber car.

Pay attention to your local news to know what changes are being made with Uber and the transportation industry in your city. Knowledge about Uber’s risks and benefits put the rider in control of safety.