A former Uber employee said the company’s “safe ride fee” scheme was an “obscene” means of boosting profit margins.
A new book alleges Uber brought in $500m in revenue from the surcharge, which was a dollar or more in many US cities, after it as brought in in 2014.
However, rather than spend that charge on ensuring riders were receiving safer drives, the fee as “devised primarily to add $1 of pure margin to each trip,” according to an excerpt from Mike Isaac’s new book Super Pumped: The Battle for Uber.
The company, facing rising fees from insurance companies and background checks intimated it would use the fee for better driver screening and incident responses as well as marketing and tech upgrades.
At the time, Uber said it would fund “an industry-leading background check process, regular motor vehicle checks, driver safety education, development of safety features in the app, and insurance,” but all most drivers received was a short instructional video.
This scheme began years before Uber added safety features like an in-app emergency calling button, there report says. Within the book, written by a New York Times reporter (via The Verge), a former employee claimed to pull back the curtain on the scheme.
“We boosted our margins saying our rides were safer,” the employee reportedly said. “It was obscene.”
The fee still exists today, but in a different form. Uber now calls it a “booking fee”, required following the settlement of a class action lawsuit, which also prevented Uber using marketing terms like “the safest ride on the road.”
Uber, and founder Travis Kalanick, did not comment on the report.