Uber has had a rocky relationship with its drivers, and it seems that its troubles aren’t over. The company admitted on Tuesday to having made a colossal error in accounting – its drivers in New York City were shortchanged by nearly $50 million in payments
This happened because Uber was using the wrong formula when calculating the drivers’ earnings. Instead of subtracting taxes and fees before and then collecting its 25% commission, Uber was taking 25% of the total fare.
It is unclear exactly how much Uber profited from this mistake that lasted for more than two years. The company says it will refund the entire amount plus interest, which is about $900 per driver.
Considering the fact that Uber is a tech company, it’s very surprising that they weren’t aware of this fairly simple arithmetic error for more than two years. The company said it uncovered the mistake as it was overhauling its driver receipt system.
Rachel Holt, regional general manager of Uber in U.S. and Canada, said that the company is committed to fixing its mistake by paying every driver every penny they are owed, plus interest, as quickly as possible. She continued to say, “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.”
Regaining the drivers’ trust will not be so easy given Uber’s troubled history with its drivers, especially those in New York. In January, the company agreed to pay a $20 million settlement, because it misrepresented to drivers about how much they could earn by signing up. The company claimed that the median annual income for drivers in New York was more than $90,000. But in reality, less than 10% of the drivers made that much money.
- Refund – pay back money
- Colossal – extremely large or great
- Shortchange – cheat someone by giving insufficient money as change
- Fare – the money paid for a journey on public transport
- Overhaul – a thorough examination of machinery or a system, with repairs or changes made if necessary
- Transparent – clear
- Misrepresent – give a false idea of
Questions for Discussion
- In what ways can mistakes like this hurt Uber?
- Based on your own knowledge and/or after reading the article, what is the impression you have of Uber as a company?
- Do you think Uber has done enough to regain its drivers’ trust? Explain.