Uber unfairly skimming our tips, say some drivers

Mother Jones has an item today on complaints by drivers for "hail a black car/taxi/SUV with your smartphone" company Uber: the company website claims your fare includes a 20% gratuity "for the driver," but one driver told MoJo's Josh Harkinson that "half of that gratuity actually goes to Uber." And if that's true, "the company would be misleading consumers and breaking the law in some cities."


  1. I’m as big a fan of digital convenience as anyone, but not of unethical business models.  I’ve so far only heard bad things about Uber.

  2. I read some articles about the regulatory hurdles Uber had to go through when they were launching.  I wouldn’t expect an upstart competitor with clear and fair tip payment terms to challenge them anytime soon.

    1.  The nice thing about fighting through regulations that serve only to protect the establishment and nothing else, is that if you manage it, hey, you get to be part of the establishment and don’t have to do with any of those upstarts that might manage to unseat you in the same way.

  3. I’ll just leave this article about Uber’s founder right here: http://pandodaily.com/2012/10/24/travis-shrugged/

    1. Sounds like Travis Kalanick is yet another libertarian idiot who puts business ahead of people.  Guess I shouldn’t be surprised that he’s a scumbag.

    2. Heh. And a link from that page leads to a story about Uber doubling its prices in NY for the Hurricane Sandy aftermath.

      Christ, what assholes.

      1. But, but, everything is better when it makes more money. Especially disasters and human misery. Cos if they don’t like being gouged while they’re desperate, they can go start their own company, amirite?

  4. It seems like the language in the payment terms seems odd rather than the math? I am often math challenged so I could be doing this wrong but splitting the gratuity in half between the two parties is the same amount as giving the driver the full 20% and Uber takes a 10% of fare as a service fee? I don’t know if thats a fair deal for the driver or not but it doesn’t seem like Uber is taking their tips is all. 

    1. The problem is deceptive marketing. Their website says “20% gratuity”, but their agreements with drivers say “10% gratuity”.

  5. Still waiting for something to come out that would make me want to use Uber. 

    So Uber is taking, what, 20% commission on the ride itself and half of the tip? Yikes.

    How does their board not bring this shit under control?

    1. Actually it sounds like they are taking 20% commission + $1 total. I’m not sure why they would need to touch the tip They could easily get the exact same amount of money by applying a slightly larger percentage against the base fare.

    2.  If the fare is $10, you pay $13:
      – $10 fare to driver
      – $1 flat rate booking fee to Uber (stays the same regardless of fare),
      – 10% of the fare as commission to Uber
      – 10% of the fare as tip to driver.

      But Uber advertises itself as only taking the booking fee and giving the driver a 20% tip.

      1. Uber is a mess. Reminds me of Groupon and Andrew Mason. Shervin and the rest of the board needs to bring that kind of greed and hubris of their Ayn Rand loving CEO under control before it tarnishes the brand completely. Taking on entrenched local regulatory agencies in the pocket of special interests? Fine. Deceptive advertising practices? Not so much.

  6. Tips are a gift from a customer to the person who they are giving them to. Unless the intended recipient has formally agreed to some sort of tip-sharing system, anyone else taking a cut of those tips should be regarded as nothing less than straight-up theft.

    1. Only according to the CEO’s bible, written by Ayn Rand circa 1957. Of course, he says he only enjoys the artwork. 

  7. I don’t know if this is really a story of significance. Uber automatically adds a 20% gratuity to the end of a fare, then charges the cab operator 10% of the fare. Riders don’t seem to have options when choosing gratuity, so there isn’t much evidence to suggest that the actual *gratuity* is being split.

    Based on what my frequent-taxi-riding friends tell me (I’m an infrequent rider), a 20% tip is enormous in the first place. I can understand how this would come from marketing material aimed at drivers – a sort of “you pay nothing because our auto-gratuity is so high!” pitch.

    Seems a bit overblown.

    1. The significance is that Uber advertises itself as automatically giving the driver a 20% tip, but their contracts with the drivers give them only a 10% tip.  That’s deceptive advertising, and in addition various jurisdictions have laws that regard this disparity between the advertised tip rate and the effective tip rate as illegal tip skimming.

      1. I don’t see how the driver doesn’t get a 20% gratuity in any of the scenarios presented. On a $10 fare, the driver gets the fare ($10) plus a $2 tip, minus a 10% “marketing fee” ($1), for a net of $11. You could just as validly deduct the marketing fee from the fare.

        But there is no evidence to suggest that either A) the marketing fee would be increased if the gratuity were voluntarily increased by the passenger, or that B) the marketing fee would be eliminated if the passenger failed to pay any gratuity. These two points seem to indicate that this is not tip-splitting, but simply the byproduct of a handful of math-deficient marketing gurus struggling to explain money to their target audience.

        1. If Uber had said on their website “all fares include a 20% tip, and all drivers pay us a 10% commission on each fare” then there would be no problem.  But that’s not what they say on their site*.  Thus they are engaging in deception of their customers (making you think you’re giving the driver a bigger tip than you are) and if you do that about tips, then you’re breaking various laws against tip skimming.

          * Their site just says “Use Uber to request and pay for a taxi, at standard taxi meter rates plus a $1 booking fee. A 20% gratuity is automatically added for the driver by default.”

          1. Applebee’s says, “18% gratuity added for parties of 6 or more.” It doesn’t say, “18% gratuity, 3% of which is paid to the hostess, 2% to the bus boy, 4% to the plate runner, and the waitress had to pay us $14 to rent the uniform.”

            I don’t think it’s the duty of businesses to disclose to consumers the line-item breakdown of their cost structures. A 20% gratuity is a 20% gratuity; nothing presented indicates a tip-sharing scheme, and paying a “marketing fee” or a commission to a marketing entity like Uber doesn’t sound like the sort of thing that needs to be disclosed to the public, regardless of the arrangement.

            Do you think that taxi drivers should be itemizing the rest of their business expenses for public review? They don’t tell you how much the car wash charged them for the detail job; is that “deception” of their customers?

            Don’t be ridiculous. The commission agreement between Uber and the driver is between Uber and the driver, not Uber and the passenger. The driver gets a 20% tip and the driver pays a 10% sale commission. None of that is shady or deceptive.

          2. If Applebee’s behind-the-scenes gratuity divvying system was “10% for waitress and 5% for the manager,” that would be tip skimming, and illegal.  Likewise, Uber is being sued for breaking the law because they advertise that they give the drivers a 20% tip, when in actual fact the drivers are getting a 10% tip.

          3. There is nothing to make us believe the 18% goes only to the server. It’s just an 18% service charge. In fact, I would think restaurants explicitly don’t state it is for the server to avoid this mess.

            Uber says a 20% gratuity is automatically added for the driver by default. Seems like false advertising.

    2.  I do tend to automatically round up the change at least. And give a proper tip if the cabbie was sound & there was shitty traffic/they used a short cut that was actually shorter, that kinda thing. However, I’d prefer to be able to reserve the right not to tip if the driver’s a miserable arsehole/late/a crazy BNP-voting loon/blatantly takes a longer route, etc. Thenm I’ll stand and wait for them to fossick around in the glove box for my change.

  8. OK, here’s my take.  Uber’s terms: $10 fare: 20% “gratuity” $1 “Taxi Fee”.  Then the description goes on to break down the 20% “gratuity” into 10% for uber, 10% for the driver. 

    So on the whole $13 transaction, the driver gets $1.  The taxi company gets $10, and Uber gets $2.  This means that if Uber advertises “20% gratuity” it’s misleading because it seems like the driver is being treated generously, when Uber is helping itself to effectively 2x what the driver gets on a $10 trip. 

    Uber screwed up.  They have their language wrong.  If we didn’t change any of the numbers, it should just simply state:  $10 fare, 10% tip to driver, 10% gratuity to Uber, $1 Taxi Fee to Uber.  $13 total.  Then it’ll be calling it the way it is.  Drivers are getting shafted because customers are thinking, “Oh 20% gratuity, that’s fair.”  But in reality, the driver is getting the short end because he or she only gets half of that thing that is being called “gratuity”. 

    The Truthiness is strong with Uber.

    1. I don’t use taxis unless I have no other option becuase they’re so damn expensive, but would a 20% tip really be thought of as ‘fair’?

      What is a normal level of tip for a taxi driver?

      1. According to my taxi-taking friends, an appropriate tip is a dollar or two plus rounding up the change on the fare. That sounds outrageously low to me, but thinking back, my drivers have always reacted especially pleasantly to my tips (which I figure at about 15%), so maybe that’s more standard than I thought.

    2. Almost all of these drivers actually own their own car (at least in San Francisco). That $10 fare goes right to them which is a heck of a lot better than making $1.

      1.  Out of which they pay for gas, maintenance, whatever the city charges as its taxi licence fee, etc, etc. Here in Toronto, the regulated cab fares don’t leave much in the driver’s pocket, especially since the fares don’t include any allowance for the volatile and ever-rising price of fuel.

      2. So you’re saying you don’t care if they’re lying about whether the whole 20% goes to the driver or not because many drivers own their own cabs?

        1. Well, the money is fungible. Uber could just as easily have said they were taking 24% from the base fare and paid out the entire tip and they still would have ended up with 20% of the total fare and the driver with 80%.

          Look, I’ve never met an unhappy Uber driver. Quite the contrary, every Uber driver I’ve asked seemed to be pretty thrilled about it. So I have a hard time worrying about coming to their defense about supposedly lost tip money.

      3. And they paid cash for their cars with their enormous trust funds? And the maintenance on them is done by elves?

  9. I am shocked. SHOCKED I say!That such a self-entitled company such as Uber would do something so disreputable to the the lazy filth…err…the little people…their partners.

  10. I’ve had nothing but good experiences (many) with Uber and have found them to be lifesavers when in SanFran (worst taxi city on earth) and NYC (when raining). I’m happy to pay a bit of a premium for outstanding service, articulate and helpful drivers, and an overall outstanding user experience. Appears to me to be a semantic issue…at the end of the day, every driver I’ve talked to about driving with/for Uber (which is dozens of them) has been extremely positive about the experience. Always fun to focus on those who are unhappy…but in my experience, it is an outstanding service at both the meta and driver levels.

    1. I’ve had nothing but good experiences …with Uber … lifesavers … outstanding service … outstanding user experience … extremely positive … outstanding service … 

      You used your account for two posts.  One of which just so you could post this public relations drivel.

      My only question for you is, what is your business association with Uber?

  11. I’m kind of confused by the whole concept, me. Is the taxi system really that shambolic? Here in englandland, most cab firms big enough to have fleets rather than hire owner-drivers have tech at least this good in-house (the two biggest near me both have smartphone apps) and the little firms are catching up fast. Everyone does automated text notifications when your car’s nearly there, even tiny hole-in-the-wall firms.
    We have a similar company for small takeaway places called justeat, which is a portal for online ordering & payments, which small food joints don’t have themselves, which works brilliantly and everyone seems happy with, so I can kind of see why this might work (they both facilitate conveying stuff for the benefit of drunk people after all). I just can’t figure why it already hasn’t been sewn up by the cab firms themselves. This lot sound like a bunch of dicks for starters, and considering the set-up costs for tech like this are negligible nowadays, a dollar on every fare sounds like a very expensive way to get customers.

  12. I talked to a cabbie about this and he seemed very clear that the situation is exactly as stated: Uber takes 1/2 of the automatically-deducted 20% “gratuity” fee. To be fair, the cabbie also said that he still quite liked Uber, specifically calling out that being cashless makes him feel safer. 

    It’s deceptive (it deceived me), to market the 20% as a gratuity that goes to the drive. I certainly thought, before specifically asking how it worked, that the driver’s were getting a 20% tip. I thought that was generous and a good deal for the drivers, making me feel okay about using Uber in SF even though I think there are perils in de-regulating the taxi market. (Having talked to taxi drivers in Chile, where the streets are jammed with taxis, but the market is so ‘efficient’ that it’s terribly difficult to make a profit.)

  13. The U. S. Department of Labor recently announced that gratuities to drivers are only legal if the rider has the right to raise, lower, or eliminate it altogether. They also ruled that the driver must receive all of the gratuity (not half like with Uber drivers) and riders must be made aware of their ability to raise, lower or remove it. So to be legal, Uber needs to allow the rider to decide the amount.

    Uber has a right to charge a booking fee and add it to the “base fee” (the amount on the meter when the flag goes down).  But leave it up to the rider what tip to pay at the end of the ride. So the $10 fare would become – for example — a $14 fare when including the $4 Uber fee and the rider can add any amount as a tip.

    This would not only comply with the law but also result in better quality service because drivers would know their tip is dependent on how they treat the consumer.

    1. Aye, I don’t like forcing ‘service charges’ on folks.  I wouldn’t use ’em just because they’ve baked the tip in, tbh. I know, I know, wait-staff get paid fuck-all and tips are half their wages. I REALLY don’t like that that’s the case either, it’s despicable. We’re not reknowned as tippers as a nation us Brits, though I’ve had enough shitty service jobs that I understand what a nice thing it is to do for folks. And, knowing about this piss-take they’ve got going on, if I was forced to use ’em by circumstance, I’d be tempted to tip the driver direct, just on principle to screw Uber. out of their cut.

  14. I used Uber a lot in Paris, 3 years or so. I was pretty happy with the service compared to the local taxis. One night a friend left his wallet in the car. I didn’t know since I got out before his house. He called me the next day so I wrote a support ticket and dropped in his email. A few days later I asked him what was up and he said the driver at first claimed to not have found a wallet, then remembered, then agreed to meet up, then didn’t show, then claimed the wallet was stolen from his car the next day.

    I contacted uber and they politely told me they were a “Technology Company” and were only the bridge between cars and people. Other times when I had complained about routes or any other issue they gave me money back and apologized. They seemed to have control over the system itself but I guess not. I suggested that maybe as part of the uber service agreement between drivers and uber they add a section about mandatory reporting of stolen property to police blah blah blah blah. They told me they would happy to comment on a police report if I made one.

    The community managers are really nice but my faith in the service has taken a nose dive. I swore it off but moved to a new city and was carless for a month so I had to give in. I’m hoping Car2Go or some electric car rental service could replace most of the conveniences,  minus the drunk ones.

  15. I use Uber regularly in San Francisco, and it’s vastly better than the alternatives. The other apps I’ve tried are unreliable at best, and calling a cab by phone or on the street is a joke in most neighborhoods. I would probably have to own a car otherwise. Maybe the company are vile, scum-sucking pigs, but it’s pretty hard to do commerce in the world if you sit in moral judgement of all corporations (much as one would like to). At least these scum-sucking pigs are disrupting the scum-sucking pigs that own all the medallions.

    1. When I lived in the Outer Sunset, a suggestion to call a cab would have been greeted by gales of laughter. You might as well ask them to pick you up at the Farallones.

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