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Uber Settles Lawsuit Over Driver Background Checks For $10 Million

By Val Powell
Published on: 02:25 PST, Apr 8, 2016

Uber has settled a lawsuit filed by the District Attorneys’ Office in California over its driver background checks for $10 million.

The settlement, which was approved by a San Francisco judge today, orders the ride-sharing app to pay monetary penalty worth $10 million and if the company fails to pay the desired amount within 60 days, it will be obligated to shell out an additional $15 million. The additional penalty will be waived after two years if the company does not violate the terms stipulated in the settlement.

In 2014, the cities of San Francisco and Los Angeles sued Uber for its misleading advertisements claiming the company conducts thorough background checks on its drivers. However, it has been revealed that Uber failed to take their drivers’ fingerprints.

Now the company says they will no longer claim they have the best background check policy in the industry or that they are the “safest ride on the road,” after the District Attorneys of Los Angeles and San Francisco called them out for their misleading marketing statements.

As a result of the lawsuit, Uber is also ordered to make changes to advertising and airport policies. Uber may only operate at airports where it is allowed to pick up and drop off passengers, and it cannot misrepresent additional fees. The business venture reportedly used to operate at airports where it did not have the authorization to do so and allegedly charged a $4 airport toll fee.

Since the District Attorneys of Los Angeles and San Francisco filed the suit, Uber entered into a contract with Los Angeles International Airport, San Francisco International Airport, and several other airports in the northern and southern parts of California to let its drivers pick up and drop off riders at terminals.

“The result we achieved today goes well beyond its impact on Uber,” San Francisco District Attorney George Gascon stated shortly after the court decision was finalized. He then reminded business owners the consequences of not following the law. “It sends a clear message to all businesses and startups in particular, that in the quest to quickly obtain market share, laws designed to protect consumers cannot be ignored. If a business acts as it is above the law, it will pay a heavy price.”

Uber also promised to continue working with Division of Measurement Standards (DMS) to guarantee its app’s fare calculation based on GPS data remains fair.

After solving the company’s background checks issues, Uber says they will put extra effort into improving their service.

“We’re glad to put this case behind us and excited to redouble our efforts serving riders and drivers across the state of California,” an Uber representative said in a statement.

The lawsuit came up after Gascon’s office discovered 25 cases of Uber drivers with serious criminal backgrounds. In February, Uber changed its deceptive name “safe ride fee” to a “booking fee” and it was forced to pay $28.5 million to settle two consumer class-action lawsuits.

Uber competitor, Lyft, also faced the same legal troubles a few years ago. The same DAs sued the ride-sharing app for making misleading claims about their background check procedures. The court ordered Lyft to pay $500,000 settlement.

The problem over background checks is not the only legal issue Uber is facing, as a separate class-action lawsuit will proceed to trial in California. This case seeks to classify Uber drivers as contractors instead of employees. Reports say Uber is valued at over $60 billion, so a $10 million lawsuit will not hurt the company that much.

[Photo by Eric Risberg/AP Images]

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