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Uber Sued Over Alleged Scheme to Collect ‘Fraudulent’ Cancellation Fees on No-Show Rides

Another suit nips at the heels of the behemoth.

Uber CEO Travis Kalanick in 2013.

 

In July 2015, Michael Cordas hailed an Uber and waited for it at the appointed place, outside the Grand Hyatt Hotel in midtown Manhattan. And he waited. The car’s estimated arrival time came and went. After 10 minutes, Cordas tried calling the driver. Instead, he got an operator recording—the number was a “non-working number.” A text he sent returned the same response. A few minutes later, the Uber app notified him of a $10 charge, because he had “canceled” his Uber request.

After going through the same rigamarole two more times—in Toronto and Irvine—Cordas, a California resident, became the lead plaintiff in a class-action lawsuit filed today in the U.S. District Court’s Northern District of California. In the Irvine incident, which took place in May 2016, the suit alleges that a $5 cancellation fee was never reversed. It goes on to allege that these three instances are not isolated incidents, but part of a “deceptive scheme” to “generate millions of dollars based on [Uber’s] fraudulent, unearned and unconscionable ‘Cancellation Fees.’” 

An email sent to Uber’s PR team has so far not been returned.

Is there really evidence of a widespread problem with bogus fees for no-show rides? Asked whether Cordas is the only plaintiff on board so far, Kristopher Badame, the attorney whose firm filed the class action, didn’t give a definitive answer, replying only that Cordas is the lead plaintiff but that the class “consists of all Uber users in the United States that were subjected to their fraudulent cancellation fees.” The suit asks the court to send notices to all current and former Uber customers of the past four years who may have paid these fees for rides that didn’t appear.

In April, Uber began a pilot that toughens the rules on canceling rides. The pilot—only active in New York City, New Jersey, Phoenix, and Dallas—penalizes riders if they cancel a ride more than two minutes after requesting it (the previous time limit was five minutes).  

This new suit contends that Uber’s algorithm is “intentionally designed to charge a cancellation fee regardless of circumstances to the customer/driver.” As far as Badame knows, his firm’s suit is “the first case on file regarding these allegations,” he says. Past suits—which Uber settled—have been over the classification of workers as freelancers, not employees, and the misleading $1 Safe Rides Fee.

Could the cancellation fees blow up into a big deal, or is this one more suit nipping at the heels of a behemoth? “I don't see many bigger consequences of this lawsuit,” says Eric Goldman, director of the High Tech Law Institute at the Santa Clara University School of Law, after reviewing the complaint. “The plaintiffs may have discovered a glitch in Uber's software or policies. Those kinds of glitches happen to every large online service; and if the lawsuit makes it far enough, they get resolved with a settlement that Uber can afford.” 

Goldman also wants to know more about how Uber’s software behaves. “Does Uber routinely refund cancellation fees, even if they allegedly didn't refund it for the named plaintiff?” he asks. “If so, there may not be many Uber users to join the class.”

  

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