Insight

It's Cheaper, But What's the Cost? - Uber and the Sharing Model

Union-side counsel provides information about the safety of Uber.

Uber and the Sharing Model
Sean T. Mcgee and Alison McEwen

Sean T. Mcgee and Alison McEwen

November 21, 2016 12:00 AM

You can’t fight progress, so stop trying. This was the theme of an editorial in The Globe and Mail in mid-December defending Uber’s right to do whatever it wants. Unless you are living under a rock, you would have seen the disputes between Uber and taxi drivers.

We want to be upfront: we are union-side counsel. To add to our bias, we actually represent some taxi drivers. So, feel free to be skeptical about our objectivity (that is if you believe that anyone is truly objective. But I digress).

But, do you know what else happens when you represent taxi drivers? You end up knowing a lot of things about taxi drivers. And about Uber. We are not here to convince you not to take Uber. But if you are going to get into an Uber, you should make sure you are informed. Because Uber isn’t everything it purports to be.

Unregulated for Safety - Don’t worry, it is totally as safe as you think!

Uber tells you that it is safe: it’s okay, we do criminal record checks! And maintenance checks! But what does that mean in reality? If you think that Uber’s police checks are sufficient, we encourage you to think again. Search for the stories on any mainstream news outlet. And even if the initial record check was sufficient, what about those drivers who commit a crimeafter they become an Uber driver? And the driver rating: first of all, that only helps once something bad has already happened to at least one person. And second, Uber has no obligation to post the bad ratings, so why would they? You are trusting the company selling you the product to tell you when the product isn’t good. Totally makes sense.

Taxi drivers, on the other hand, are put through rigorous criminal record checks. In Ottawa, a taxi driver must provide a declaration that there are no criminal (or pending) charges on a yearly basis, and a full Police Record Check every three years. This is on top of the fact that each taxi is equipped with a sealed camera recording the interior of the vehicle, which can only be accessed by the police. Some Uber cabs may go down to Best Buy and put in a webcam. Most don’t.

As for the maintenance side, taxis are inspected regularly, often several times a year, to make sure they are mechanically sound. In Ottawa, that inspection is carried out at the City’s maintenance facility, to ensure that the standards are met. Uber’s requirements are nowhere near as onerous: the driver must represent that his vehicle is in good working order.

I think the Uber passenger contract says it all: “Uber does not guarantee the quality, suitability, safety or ability of third party providers. You agree that the entire risk arising out of your use of the services, and any service or good requested in connection therewith, remains solely with you, to the maximum extent permitted under applicable law.”

Insurance - meh, who needs it?

This is the one that people are most often confused about. It is true: the contract requires Uber drivers to have insurance. But it also requires drivers to tell their insurance company they are driving for compensation. And most drivers won’t: because that would cause their insurance rates to skyrocket. And insurance companies aren’t likely to make a payment on somebody’s personal policy when there is also a claim from a passenger who paid for the trip.

You are probably thinking: “But wait! I heard that Uber is getting some huge policy in Ontario, so I must be covered”. And that is what Uber wants you to think. But if you look closely, you probably won’t have access to this insurance either. In the contract between Uber drivers and Rasier (which is the company that makes the driver app… more on why there might be separate companies later), there is an indemnification clause, which reads as follows: “You [the driver] shall be liable to the Client for all claims of damage and/or injury to any Client sustained while being transported by you”.

Just in case you thought you were safe, the passenger agreement has the following:

“Uber shall not be liable for indirect, incidental, special, exemplary, punitive, or consequential damages, including lost profits, lost data, personal injury, or property damage related to, in connection with, or otherwise resulting from any use of the services, even if Uber has been advised of the possibility of such damages. Uber shall not be liable for any damages, liability or losses arising out of: (i) your use of or reliance on the services or your inability to access or use the services; or (ii) any transaction or relationship between you and any third party provider, even if Uber has been advised of the possibility of such damages. …in no event shall Uber’s total liability to you in connection with the services for all damages, losses and causes of action exceed five hundred U.S. Dollars.”

But don’t worry. I am sure that $500 will go far.

The greatest fallacy of the argument of Uber supporters is that people are sophisticated: they should be entitled to make free choices and vote with their wallets. The free market worked for Enron, and so it will work for you too! People don’t read the user agreement. When was the last time you looked at the fine print when installing an app? We are lawyers, and between the two of us we couldn’t remember the last time we did.

The editorial may think worries like that are “old school” thinking. But taking such a risk to save $2.50 on a fare seems foolish, to say the least.

For taxis, on the other hand, municipal regulations require minimum insurance for any taxi driver. It has to be commercial insurance. And the driver has to prove that a policy is in place. End of story.

Accidents have already happened. They are unavoidable. Someone with a catastrophic injury may be unable to get any money from any insurer. People are putting their health and their economic futures at risk if they get into a car that is not properly insured.

The Price Might Be Too Good to Be True

In many municipalities, the fare for your taxi is, in fact, not set by your driver. Instead, there is a schedule in the by-law that sets what the driver can charge. And they cannot charge any more, or any less.

Uber has taken the position that the fare schedule doesn’t apply to them. So they can get you around cheaper… until something called “surge pricing” hits. If you are trying to take an Uber at a busy time, the fare can be double, quadruple, or even be eight times the normal fare.

On top of this, they also reserve the right to charge you whatever they deem “reasonable” should you dirty the vehicle. In taxis, that “cleaning fee” is also set in the by-law, so you cannot be charged more than that. Not true in an Uber. And they have your credit card on file. So you won’t even know until you have already paid. The lesson here: make sure not to yak in your Uber.

Public Policy - those who Uber won’t serve

There are also greater societal reasons to be concerned about Uber, including accessibility on a number of fronts. In Ottawa, a certain number of taxis are designated to be accessible taxis, which supplement the accessible transportation provided by OC Transpo. These cabs are specially equipped, and the drivers get special training. There is not enough work for them to be accessible cabs full-time, so they often supplement with other fares. But because the City provides the training, they remain usable as accessible taxis. Uber drivers are not trained or equipped to help this segment of the population. So, if Uber ends up driving cabs out of business, this segment of the population is going to have a significant difficulty that can’t be addressed by OC Transpo alone.

Additionally, a cab can only refuse a fare in Ottawa for a finite number of reasons. And racism/classism/sexism/ageism isn’t one of them. Privileged white people will always get picked up. But people make snap decisions based on appearance every day. There are segments of the population that, when the Uber driver sees them, that driver might keep right on driving. But don’t worry about that, this is innovation!

Which Uber are you talking about?

Uber is actually not one company. There is Uber, which makes the passenger app; Rasier, which makes the driver app; and one Canadian company, which does only marketing. This makes them incredibly difficult to pin down. Especially since the two companies making the apps are based in the Netherlands.

Further, when Canadian municipalities have brought actions against Uber and affiliates for violating by-laws, Uber has (successfully) pled that it is not providing a transportation service, it is only providing a communication app.

This is also the company that steadfastly adheres to the line that the drivers aren’t employees. The drivers get no benefits, no workplace safety insurance, and no help should there be trouble. Uber drivers, this is something for you to think about: this company has already disowned you. If things go sideways, they will most likely run fast while pointing the finger squarely in your direction. That is what they have set themselves up to do in their contracts: cut and run if things go wrong, leaving the individual driver holding the bag.

So, what now?

We know there are problems with the taxi industry. We are certainly not saying it is perfect. The Toronto demonstration was a very difficult situation. Taxi drivers, who have expended considerable time, effort, and money to ensure they are operating within the legal confines of the ride for fare by-laws, have been forced to watch as Uber comes in and treats it like the wild west: the rules don’t apply to them. And the taxi drivers have not received enough support from the municipalities, who say that it is too hard to catch Uber drivers and it is too hard to enforce the by-law that has been enforced against the taxi drivers for decades. Even so, this does not justify some of the behaviour we have seen to date.

Of course, Uber isn’t Skynet (although a number of taxi drivers who are losing their livelihood would probably argue the opposite), but people who say we can’t stand in the way of technology miss the point. Technology has to be evaluated like any other service provided to the public. Food trucks are currently very popular, and designed to be a quick, cheap alternative. Yet no one is out there saying we should relax the health and safety regulations for food trucks. “Yeah, I don’t care if my meat was left out for five days, it was cheap!” So why are we so quick to dispense with the safety rules in transportation?

And, by the way, the Globe and Mail editorial is wrong: it is not too late to ban Uber. Uber is already banned. By the by-laws that already exist. But, somehow, that is overlooked in all of this.

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