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In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Market Commentary

Uber Now in Trouble in England

If you want to see why Uber has so many enemies, all you need to do is take a look at the situation in the United Kingdom. The networked transportation company is succeeding in making itself one of the most hated companies in that country.

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One of Britain’s most famous newspapers The Guardian, is accusing Uber of gouging customers during a subway (or as the Brits say, “Tube”) strike in London. With the Underground shutdown, Uber allegedly charged Londoners fares that were 2.9 times higher than normal.

Uber normally charges London riders a minimum fare of £15 ($23.07), but that rate nearly tripled to £43 ($66.13) after transit workers went on strike, The Guardian reported. The reason for the increase was Uber’s surge pricing, which kicks in when demand for Uber is high.

Surge pricing is only in place in certain parts of London, such as the City (downtown) but not surprisingly, Uber drivers congregate there to line their pockets. Not amused are London residents and traditional black cab drivers.


Britain’s Underpaid Uber Drivers

This is not the only controversy dogging Uber in the United Kingdom. Earlier this month around 40 London Uber drivers told a Guardian reporter that they make less than minimum wage. There have been calls for Uber drivers in England to unionize and strike against the company as well.

One Uber driver, Terry Hoy, told the Guardian that makes around £6.3 ($9.69) an hour driving for the app-based company. Hoy also complained that he has to work 65 hours a week to make a living. Another driver who refused to be identified claimed to work 90 hours a week for £6.5 ($10) an hour. Many of the drivers are immigrants that have to support themselves and their families on such wages.

To be fair, Uber drivers in the United Kingdom do have a lower cost of living because of Britain’s welfare state. They can take advantage of free taxpayer-subsidized healthcare through the National Health system for example. That means they could be better off than American Uber drivers.

Uber Accused of Using Fake Insurance Papers in Britain

Some Uber drivers in London are operating without insurance by using fake insurance papers, The Guardian alleged. A Guardian reporter and a driver  made up a fake insurance company called Freecover and used Adobe Photoshop to create fake policies that apparently fooled Uber’s system in a YouTube video created by the newspaper.

An anonymous whistleblower inside Uber even showed Guardian reporter Robert Booth how to make fake insurance documents and upload them to Uber’s system.  Booth claimed that somebody at the company had approved drivers using Freecover even though the insurer was an obvious fake.

Drivers would take that step because it costs around £6,500 ($9,996.37) to insure an Uber vehicle in London for a year. At the same time, Uber fares in London are dropping, putting pressure on drivers to cut corners.

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It is unclear how many of the 15,000 Uber drivers in London are operating with fake insurance, but taxi regulator Transport for London has launched an investigation into the practice. Not surprisingly, Uber is denying the allegations.

“It is absolutely not possible to cheat the system,” Uber’s regional manager for the UK Jo Bertram told The Guardian. “Public safety is our number one priority. We have no interest in allowing any driver who is not fully licensed and insured on the platform.”

The Uber driver who told Booth about the Freecover scam has apparently been thrown out of the company’s system. That driver told Booth he had legitimate insurance.

This is not the first time questionable driver insurance practices have been exposed at Uber. In December, BuzzFeed reported that one of its reporters allegedly heard an Uber representative in California deliberately telling perspective drivers to violate state law. California law requires hire vehicles to have commercial insurance, but an Uber representative told drivers they could operate with normal auto insurance.

The only problem with that is the California Division of Motor Vehicles requires any vehicle used for commercial purposes in the state to be registered as commercial. Most large U.S. auto insurance companies, including Allstate, GEICO, Progressive and Farmer’s, have policies that specifically do not cover ridesharing activities at any time, although Allstate now offers a separate insurance policy for networked transportation vehicles in some U.S. states. That means the information Uber provided the perspective drivers was flat out wrong.

It looks as if Uber could soon be in as much trouble in the United Kingdom as it is in France and Florida. One has to wonder if it will soon be banned in that country, much as it was banned in Germany. Uber’s major ability seems to be to create enemies. How is a company that turns almost everybody against it supposed to survive?