Investigative Report

Ride-Sharing Services: Curb Your Enthusiasm

Ride-sharing services are designed to give consumers a more convenient alternative to taxi services. However, ride-sharing-service providers have mystifying pricing policies, require little training for drivers and don’t go far enough to insure consumers if they’re injured in a crash.

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When 34-year-old William Beutler wanted to escape the massive crowds at the South By Southwest music and arts festival in downtown Austin, Texas, to retreat to his hotel room in March 2014, the notion of hailing a taxi amid the sea of people never crossed his mind. Instead, Beutler clicked on a mobile application to summon a ride from Uber, which is a service provider that connects people who want a ride with people who use their own vehicle to provide a ride.

Beutler figured that his 5-mile ride that night would be expensive, because Uber charges extra when demand is the highest. He also knew that Uber was sending a more-expensive tier of service—a so-called Black Car—because that was the only service that was available that night. However, Beutler didn’t know that the ride would cost a staggering $200—$40 per mile!—until the driver reached the hotel, and Beutler, like all other customers, got a receipt via email for a payment that was charged automatically to his credit card.

Beutler is the executive producer of a short documentary film that supports Uber, but he admits that the cost of his 5-mile ride struck him as “insane.”

An increasing number of people in the United States are lured by the technological convenience that makes so-called ride-sharing services appealing. The companies that provide ride-sharing services—Lyft, Sidecar and Uber are the only such providers that are in multiple cities—want you to believe that using their service is like getting a ride from a friend. During our investigation, we found drivers who greeted us with fist bumps and offered free candy, bottled water and smartphone charging. Lyft vehicles even are decorated with large pink mustaches on the grille. Sounds pretty cool, right?

Click chart above to view full presentation

Click chart above to view full presentation

Behind the friendly facade of ride-sharing services exist business practices that can be a consumer nightmare. Ride-sharing-service providers play games with their pricing, don’t disclose what they do with your personal information, lack proper insurance to protect riders and do little to determine whether their drivers have a criminal background or even have a vehicle that’s suitable to transport people.

The potential problems help to explain why so many cities and states are fighting to regulate the ride-sharing-service industry. At press time, proposals ranged from requiring providers of ride-sharing services to have a license that would make them abide by many of the same regulations with which taxi operators must comply, to attempts to ban them. However, the status of the proposals was a moving target at press time, so it was difficult to pin down the likelihood that particular proposals would become concrete restrictions. Naturally, ride-sharing-service providers oppose such regulations. They argue that they’re technology companies rather than companies that directly provide rides. They insist that ride-sharing drivers aren’t employees but rather people who seek to make a few extra bucks as independent drivers for hire. In other words, ride-sharing-service providers don’t want to be held accountable.

Perhaps that’s why Lyft, Sidecar and Uber responded to only a few of our questions and didn’t answer our most challenging queries. For instance, neither Lyft nor Sidecar would tell us how they train drivers or for how long that they store a rider’s personal information. Likewise, Uber wouldn’t say why it won’t consider trying a new background-check system after it was uncovered that Uber hired several convicted felons. What made it even more difficult for Consumers Digest to get to the bottom of ride-sharing concerns is that the most fervent critics of the ride-sharing-service industry have at least some association with the taxi industry, which means that they seem to have a vested interest in the debate.

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