Myths and Facts About Uber

I recently had the chance to take my first ride with Uber, the ride-sharing app that’s gone from completely unknown to a valuation of over $40 billion in less than six years. While I’d heard quite a bit about the company and its business model, I found that when it came time to decide whether to take a cab or try my hand at Uber, the information I had wasn’t enough to make a decision. So I went by the one thing I knew to be true – Uber is a hell of a lot cheaper than a taxi.

uber-logo

But what do you really need to know about the company that promises to change the way we move through our cities? What’s myth and what’s reality?

It’s hard to find definitive facts on Uber for a variety of reasons – not the least of which is Uber’s opaqueness about how much their drivers make and its legal status. Also, its pricing and commission structure varies based on what city it’s running in. Finally, many of its drivers are unwilling to speak on the record, and many don’t speak fluent English. But I put together a list of common myths about Uber, how true they are, and what you should know before you decide to fire up the Uber app and get a ride with one of their drivers.

MYTH: Uber divers make a great living, pulling in an average of $90,000 a year.

FACT: This is a claim that Uber made in May 2014, as a way of stating how its model of crowd-sourced independent contractors working when they wanted to was changing the world. They claimed that the average UberX driver (the independent contractors using their personal cars for ridesharing) in New York made $90,000, and $74,000 in San Francisco – as opposed to licensed cab drivers, who make about a third of that. However, UberX drivers have complained in interviews and on Uber driver forums that they’re actually taking home less than minimum wage.

How can this disparity even be possible? It’s important to note that Uber’s “$90,000” figure is incredibly vague. It includes no supporting documentation or calculations, and is simply stated as gospel fact. It also is a gross figure, not a net figure. It’s not take home pay – because out of that $90,000 comes not just Uber’s cut, but the costs of driving an UberX, which are considerable. It also doesn’t include a number of hours or days worked. If a driver has to work 100 hours a week to take make that amount, it’s not exactly something that paints the company in a good light. Uber also has a policy of cutting its rates once its services have been in a city for a while, meaning drivers will suddenly find themselves taking home a lot less than they were before the rate cut.

A number of journalists have taken issue with the figure and attempted to debunk it. At best, it’s impossible to know how much an Uber driver actually takes home, and it quite likely varies wildly.

MYTH: Uber makes drivers pay all their own expenses.

FACT: This is absolutely true. Uber keeps its prices down primarily by passing the savings on to the consumer. The way they do that is by having drivers pay for their own cars, gas, maintenance, upkeep and insurance. Since Uber drivers are all 1099 contractors, they also pay their own taxes. If you’re driving a cab that blows a tire, the cab company pays for the repairs. If you’re driving an Uber that blows a tire, it’s on you to fix it.

An anti-Uber protest in Australia.

An anti-Uber protest in Australia.

MYTH: Uber’s surge pricing exists only to gouge customers.

FACT: The company has taken a lot of flak for its surge pricing policy, which jacks up the costs on rides at peak times, such as after events or on holidays. In theory, this is because during peak times, demand for rides increases, but the supply of drivers would remain the same or even decrease. When to kick in surge pricing is determined by both a proprietary algorithm and decisions made by human staffers. But sometimes this comes back to bite the company, such as during last year’s hostage crisis in Sydney, when Uber surge pricing charged riders four times as much as normal to get out of the immediate area.

Uber contends surge pricing exists to encourage more drivers to take on the hassle of ferrying passengers at high demand times. Drivers tended to clock out just as bars were emptying out. To keep them on service, Uber offered them more money. And it’s mostly worked – except when it doesn’t. At times like the Sydney crisis, or when prices went up 600% on New Year’s Eve in 2012, it looks a heck of a lot like price gouging – which is illegal in most states.

MYTH: Uber has a $1m insurance policy on each driver.

FACT: They do – but it’s vital to note that this is a secondary policy. Primary responsibility for insurance lies with the driver. And it only applies when the driver actually has a passenger – not when they’re driving to pick one up or circling waiting for the app to ping them. Insurance on ridesharing is a hazy gray area, with many insurance companies cancelling policies on Uber drivers because they violate the terms of the policy, which stipulate the car is to be driven for personal use only. An Uber driver covered by the million dollar secondary policy might be off the hook for the cost of an accident, only to find themselves dropped or even sued by their personal insurance company.

MYTH: Uber is technically illegal, as it provides unlicensed transportation services.

FACT: This is another incredibly hazy area. Like medical marijuana, Uber and other ridesharing services are plying their trade while at the same time quite possibly violating state and federal law. UberX’s legality is complex, thorny issue with no easy answer that varies wildly by jurisdiction. (other Uber services, such as their black car limo service, are legal, as drivers are licensed and bonded by the state). Many states and countries have banned Uber, only to see it pop up anyway. South Korea went so far as to indict Uber’s founder for running an illegal cab service. As with virtually everything Uber-related, the risk lies with the drivers. A passenger isn’t going to be fined or tossed in the can or taking an Uber – but some drivers have been.

MYTH: Drivers make their money on numerous short trips and don’t want long trips, as they suck up too much time.

FACT: The opposite is true, actually. Because of Uber’s pricing and commissions, it’s better for drivers to have one long trip, such as an airport run to or from a distant suburb, than a bunch of short trips, like taking some drunk clubbers around the corner. Uber takes $1 off every ride as a “ride safety fee”, then 20% of the rest of the fee. So a $40 airport run yields $1 plus 20% of the remaining $39, while four $10 bar runs yield $4, plus 20% of each remaining $9. This is just some of what Uber drivers refer to as “Uber math” – the complex calculations that show just how much they actually take home, as opposed to how much they gross.

A screenshot of Uber surge pricing.

A screenshot of Uber surge pricing.

MYTH: Uber drivers are untrustworthy and not background checked.

FACT: Because Uber is a bright, shiny new thing, any crime committed by an Uber driver or while an Uber is being driven tends to make the news. This leads to a misconception that Uber is the Deadwood of transportation – a lawless realm where you take your life into your hands every time you climb into one of their death mobiles. However, this isn’t really true.

Uber does background check drivers, mandating they not have DUIs, violent crimes, or sexual offenses on their record within seven years of their application – however these are online checks, not the fingerprint checks that cab companies carry out. It also requires seven years to pass before considering applicants who have gun-related violations or driving offenses. Cab companies only require five years to pass – and cab drivers still commit heinous crimes against passengers on occasion. There’s really no data on whether cab rides are safer or less safe than Uber rides, but the moral panic about ridesharing being inherently dangerous is mostly overblown ratings grabbing. You’re probably equally safe in either – and should always be careful when getting into the car of a stranger.

MYTH: You don’t need to tip your Uber driver – and your driver isn’t allowed to accept tips.

FACT: Since Uber is still fairly new, the ingrained customs that we associate with other services, such as tipping, aren’t well known. For the record, like taxi rides, Uber charges don’t include a tip. Uber makes a big show of claiming “there’s no need to tip” and doesn’t even offer the option for a cashless tip on their app (competitor website Lyft does offer a tipping option.) Uber drivers CAN accept cash tips, and they’re usually quite appreciated.

Whether or not you want to tip is up to you. But knowing what one knows about Uber – that its massive savings essentially comes out of the driver’s pocket – might help make up one’s mind on tossing a portion of your savings back to the driver.

MYTH: Driver ratings aren’t important.

FACT: They’re hugely important for the drivers. UberX mandates drivers maintain a 4.7 average rating to continue driving, meaning even a few bad reviews can end a driver’s career. You can’t hail another Uber until you’ve rated your driver on the previous one – and your driver likewise will be rating you. A passenger who piles up bad reviews might find themselves ignored when they ping the service. So be good to your driver, and your driver will be good to you.

With all of this information in mind, it’s ultimately up to the individual if using ridesharing services is something they want to do, and if the benefits outweigh the drawbacks. For the record, I enjoyed my Uber experience, got to where I was going quickly and safely – and gave the driver a cash tip.

About Mike Rothschild

Mike Rothschild is a writer and editor based in Pasadena. He writes about scams, conspiracy theories, hoaxes and pop culture fads. He's also a playwright and screenwriter. Follow him on Twitter at twitter.com/rothschildmd.
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18 Responses to Myths and Facts About Uber

  1. TorchWood says:

    Knowing how well people in the general population drive, I cannot imagine any reason to select Uber. Legit cab drivers are frightening enough for me.

    • steven schuler says:

      Uber drivers like my self actually like to take care of their own cars and we take our passengers safety serious because the last thing us uber drivers want is for a passenger to ruin our cars and also we do not want bad ratings from our customer so we drive our best.

  2. Mike says:

    Uber and Lyft have been awesome for my son who doesn’t drive. He uses them when the weather makes biking unpleasant. Cabs would not service the area we live. These services have given him new freedom. I imagine they would be great for the elderly too.

  3. James says:

    I don’t understand how Uber can allow their drivers to be unlicensed if all cab (taxi) companies require that their drivers be licensed. Is Uber somehow different or special? My guess is no. They are identical services and should be under the same type of scrutiny and laws.

    • Jason S. says:

      Uber Dallas actually mandates that all drivers and their vehicles are registered with the city. With the background check and Uber vehicle inspection requirements it takes about 30 days to become a fully licensed Uber partner in Dallas. Most people don’t know this. In addition all Uber drivers must register their vehicles with the Dallas Ft. Worth Airport Ground Transportation Agency in order to pick up and drop off passengers at DFW and Love Field Airports. These policies are strictly enforced and could cost a driver in violation over $500.00 in fines. This being said Uber drivers aren’t special and must adhere to the same rigorous standards as any Commmercial Vehicle for Hire driver, a fact that has gone understated in most conversations.

  4. Jermaine says:

    I am applying right now as an Uber Driver and they require insurance Valid Drivers license. Valid vehicle registration and they do a background check i have never commited a crime. I drive my friends around places all the time and they love me for it i am very accomidating and am willing to go out of my way for side stops for them without complaining. I don’t get paid for it but this job is basically for people who like to drive and find the time from home and car weighting favorably in the cars favor i spend 80% of my day driving so i might aswell make a job out of it and i hope the people i have in my car are as nice as i hope they are 😀

    • Bernie says:

      You stated you signed up to drive back in July. I am thinking about doing the same. Could you share with me your experience driving for Uber thus far. What’s good, the bad and the ugly?
      How many hours a week do you typically drive? Have the riders been as nice as you expected?
      I appreciate any comments you can provide me.
      Sincerely,
      Bernie

  5. Tom says:

    Aside from protests by Uber drivers (or should that be “contractors”), Uber’s less than mininmum wage has been widely reported, by outlets such as the BBC, ITV, and The Memo. Here, for example…
    Uber driver: “Once all the bills were settled such as the hire car, the diesel, the occasional fixed penalty charge notice, a minor scratch and various other small costs I was working for just under £5 per hour. This is before any other deductions such as TAX! I’m sure there are lots of other people like me out there who gave it a try based on the lies that Uber were propagating on how much money you could make!”
    http://www.thememo.com/2015/11/05/uber-driver-complaints-uberpeople-net-black-cab/

    Less than minimum wage means drivers working long hours to attempt to make up for the poor amount of money they make, hence you get this (take a look at #ubered on Twitter to see accidents from Uber drivers are frequent, not to mention plenty of examples of Uber drivers taking the long route)…
    One example of many…
    “My Uber driver fell asleep and crashed – they need to stop working stupid hours”
    http://www.standard.co.uk/news/transport/my-uber-driver-fell-asleep-and-crashed-they-need-to-stop-working-stupid-hours-10293791.html

    Uber hates competition too? For those wondering exactly why regulations haven’t been enforced, hhutting down regulators – one, within 48 hours is Uber’s game! And they had 161 lobbyists in 2014, let alone now!
    “Uber has an army of at least 161 lobbyists and they’re crushing regulators”

    http://www.theverge.com/2014/12/14/7390395/uber-lobbying-steamroller

    Then there’s the Uber account hacking going on. I wonder who would be poor – and criminally minded enough to particpate in such activity? Those who’ve had lax background checks perhaps?
    “FBI investigates Uber account information leak”
    http://www.ibtimes.com/fbi-investigates-uber-account-information-leak-1936092

    And then there’s the Uber vomit scam….
    “Fake vomit scandals are happening in Uber rides across America”
    “http://www.digitaltrends.com/cars/uber-fake-vomit/

    Uber drivers are insured? Really? Is there any guarantee of that? Well, no. Not at all.
    “Uber whistleblower exposes breach in driver approval process”
    http://www.theguardian.com/technology/2015/jun/12/uber-whistleblower-exposes-breach-driver-approval-process

    More here – Take note: “This is how easy it is to become an illegal minicab driver”…
    http://www.lbc.co.uk/this-is-how-easy-it-is-to-become-illegal-minicab-driver-126098

    And we all know about Uber paying pea nuts in tax too.
    “Uber’s Corporation Tax Payments Are Lower Than Five Black Cab Drivers’ Tax Bills Put Together”
    http://www.huffingtonpost.co.uk/2015/10/20/uber-corporation-tax-payments-black-taxi-drivers-tax-bills_n_8338000.html

    “Uber caught hiring CRIMINALS in undercover TV sting: Background checks didn’t spot convicted reckless driver and felon who served ten years in prison”
    http://www.dailymail.co.uk/news/article-3186627/Just-apply-Uber-told-three-criminals-including-woman-charged-trying-run-boyfriend.html

    From Wiki – “Uber is said to use extremely aggressive tactics such as bullying and hiring investigators to “dig up dirt” on journalists who criticize them.[4] Portland, Oregon’s transportation commissioner called Uber management “a bunch of thugs”.[5] A commissioner in Virginia who opposed Uber was flooded with emails and calls after Uber distributed his contact information to all of its users in the state.[6]”

    “The moment I learned just how far Uber will go to silence journalists and attack women”
    https://pando.com/2014/11/17/the-moment-i-learned-just-how-far-uber-will-go-to-silence-journalists-and-attack-women/

    And if you think it’s just some journalists that are scared of Uber, it goes without saying that there’s politicians that are. Don’t dare anyone ever attempt to regulate them…. Seriously, check this out.

    http://www.theguardian.com/technology/2016/mar/10/uber-lyft-austin-ann-kitchen-sxsw-texas

    Uber truly are vile.

  6. Tom says:

    Additionally, on top of my last comment: What you need to know about Uber’s insurance: https://www.youtube.com/watch?v=qaEbwpyYPUg

  7. Tom says:

    Btw, I’m quite surprised that Mike Rothschild would use Uber. From my experience, and from all I’ve seen, most informed / intelligent people steer clear of them. The folks over at Rationalwiki also tend to see Uber for what it is – http://rationalwiki.org/wiki/Uber – and I’ve not seen a good word about them on their the Rationalwiki Facebook group – quite the opposite in fact.

    • Read, Deeretay says:

      Tom, for the sake of your health relax. I hear you having a heart attack as read your rant. I am not going to individgualy address each one but well lets just get started and see where we end, okay?
      First of all the world needs to to remove the notion that business is always conducted in a gentlemen/women-ly manner.
      Being a jerk is not illegal. being a bully is not illegal (not always at least) Just because a bunch of vanilla looking guys/gals in suits with soft hands are talking means its ruin by the Boy Scouts. Who in there right mind likes to compete to make a living. Go on a game show if thats what you want. A Japanse one would be best or start your own company and report back your love of competion.
      Questions
      are lobbyist illegal.
      Do you know about the Dallas city council and vice squad contraversy?
      Was Uber cought “hiring” crimminals or are they guilty of trusting a trusted outside background check company. there is an estimated 3 million drniversworld wide. You go round up 3million saints. go ahead i will wait.
      Are Uber drivers the only type of paid driver to fall asleep?
      Are their laws about how long you can drive professionally with out so many hours off.
      Uber will shut a drivers app off before that limit. Enough examples were a fucking con man figured out a way to get around (for a short time) safe guards. Hell people still find away to cheat a casino. And just like Vegas Uber remedies them before and after.
      okay the media were there threats made or just mud dug up.Reporters hate when you go around secretly asking friends and old bosses about them. Gee that sounds like a fun job. You are doing the same thing you are pissed so you are sharing all this negative info with us.Lets settle this puke issue. Some guys have lied and extorted money and shame on them. BUT when someone does puke that needs to be professionally cleaned. the driver can not work until it is. Do you want to pay to sit in puke. If someone pukes in my car at 9pm on a pay day weekend i am screwed. I will lose way more the the fee covers. No money is paid to the driver in form of comp for lost wages. Finally because i am starting to bore my self, did Uber lie to you about what you will make? Or did they show you what you could make? Because in everyone’s bashing critique of Uber nobody has ever said the app did not deliver. Uber app gives you more pings the any other ride share app. probably combined. you seem pretty sharp you had to do some math on your cost of driving. i did the day i signed up and the first day i drove. shit cost money and everyone knows that. if they did not it was made very clear by Uber and my first day. I make a very comfortable living after all those expenses. and i make it doing a job i love,

  8. John says:

    I am an uber driver in Wilmington NC a very small town and what they did here is flood the market with so many uber drivers you can barely make any money. Uber does not care at all about there drivers because they make money no matter how many drivers there are. There is no way to make a living doing this. This is probably the worst I’ve ever been treated but any company.

    • Barbara says:

      Hello John,
      I am a new Uber driver in Wilmington NC. I received a ride request at the airport and the rider was going to surf city…which is a 40min. drive…one way. I received $22 and no tip….I was shocked. You do the math….not worth it.
      I was hoping to connect with other drivers in town to find out what are the best ways to make the most money in the shortest period of time. What areas, days, times are best here.
      I am seeing that referrals are a good way to make money as well….but you have to be really good at it like the guys on you tube giving the tips and then their spiel about their code at the end…..anyway, like you said Wilmington is a small town. I live on Carolina Beach so that’s kind of an issue too….I have sooo many questions…..I am doing this part time right now but was thinking about doing it full time…not so sure….

      • Read, Deeretay says:

        I will share with you. I live in A bigger city but these tips should apply. Start making contacts. think out the box Senior centers hospitals even tow truck drivers. call on them when it is slow. don’t forget to smooze them some or return the favor. tow truck drivers are gold think about it.If you are gonna do airport pick ups there is nothing wrong with negotiating gas money if it is remote drop off. get to know the far places. Bars, bowling allies or fun parks. stay up on events especially those geared to the younger crowd they use Uber the most.those should help but as you know or should thee is no fast easy way to make lots of cash or we would all be rich. good luck my friend

    • Read, Deeretay says:

      cream rises to the top but it will sour quick if not stirred now and then

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