Is Uber Skimming off the top?
A chance conversation with two UberPOOL pax (driver lingo for passenger) on the way to the airport got me thinking about UberPOOL, and how they payout drivers who accept rides in this service offered by the company. What I have found during my research is disturbing, and probably highly illegal.
See Update at bottom of article for new information on this research
Yes, Uber is skimming money, by hiding the real charges passengers paid versus what partners see in the Partner app. Uber takes money not seen to partner AND charges partner 25% commission on what is seen.
UberPOOL Rides for Passengers
Uber Offers a service called UberPOOL, which allows riders to get a discount on their ride from one place to another. The catch to receive this discount, you must agree to let other riders “Pool” this Uber with you. It can be a simple extra stop to pick someone up on the way to your destination, or a daisy chain of pickups, dropoffs — and 30 min. later — you finally arrive at your destination.
All of this is provided at a “Flat Rate”, which basically means, just because a lot of driving occured, doesn’t mean you will get charged for all those extra miles. This can actually be a bonus, say if, your driver missed an exit, or commute traffic is racking up your UberX “Per min. charge”.
UberPOOL Flat Rate to Passenger Examples
Jennifer wants to get from the park to Gobi BBQ, and she is not hungry, so UberPOOL is fine, she is in no rush. Uber tells her the car will be there in 5min. and the cost will be exactly $7.21. While waiting for the driver, she get’s notified that another rider will also be joining the POOL.
Alexis decides he is hungry and wants to go to Pieology, which is pricy, so he ops for an UberPOOL to save some coin to put towards a custom pizza. Uber tells him that the car is 1min. away and the cost will be exactly $7.61.
Alexis gets picked up and then 3min. later so does Jennifer. They are both heading to the same shopping center, but different storefronts, convenient! UberPOOL has done exactly what it was designed to do!
UberPOOL for a Driver
Uber bills the service UberPOOL to partners (those who do the driving) as a way to double dip and get extra cash while still on trips with a pax. So if you are taking someone 6 miles, there is an opportunity from mile 1 to mile 5 to pick up and drop off an additional passenger and scoop up some extra cash that wasn’t there before.
UberPOOL Driver Example
You get a “Ping” to pickup someone from the park as an UberPOOL ride, you touch the screen to accept the pax, it is Jennifer and she is 5min. away. Moments later, you get another “Ping”, the app is now asking if you would like to add a second pax to your UberPOOL, it is 1min away. You click the screen to accept, it is Alexis.
You pick up Alexis, as this is all that is displayed on your screen — Drivers do not see future pickup/drop off locations until each pickup/drop off in line is completed — then pickup Jennifer 3min. away after her pickup location is revealed. The app now says to drop off Jennifer at Gobi BBQ. Alexis exclaims, “I’m going to Pieology in the same shopping center”. Looks like this is an easy trip, just get these two pax to the shopping center and collect a quick fare for both!
After you drop both pax off, the Uber Partner app now reveals what was earned from the trips —
Uber Skimming Driver, Rider, or Both?
Quick Math Time
$7.62 + $7.21 = $14.83 collected by Uber from Passengers
$14.82 - $3.10 Rider Fee = $11.73 total fare subject to commission
$2.20 + $4.29 = $6.49 reported by Uber to driver for fares charged
$6.49 - $1.63 Uber Fee = $4.87 paid to driver
$14.83 - $6.49 = $8.34 collected from Passengers but not reported to driver
$8.34 + $1.63 = $9.97 total retained by Uber (excluding Rider Fee - noted as "safety" costs)
Uber Commissions and fees
Uber Partners agree to a 25% commission on fares as payment for Uber finding matches of drivers and passengers.
In the above UberPOOL example, Uber retained an 84.9% commision for matching two UberPOOL riders with one UberPOOL partner ($14.83-$3.10Rider Fee=$11.73; $9.97 / $11.73 = 84.9%)
Uber Contracts for Partners
After feedback from other drivers, and recalculating fares in above example, it appears that UberPOOL works as follows:
- Passenger requests UberPOOL, and gets instant fare amount to agree to from Uber
- Partner gets UberPOOL request
- Partner picks up passenger
- A separate rate is activated for partner, from Uber directly, using UberPOOL rate schedule
- Regardless of how many passengers are in POOL, the partner only get paid based on separate rate schedule for the duration of “POOL Mode” while a POOL passenger is active in the car.
Translation: Uber has activated two separate transactions when using UberPOOL. One transaction between Uber and Passenger, a second transaction between Uber and Partner.
So is there still skimming going on? Maybe, per the Partner Terms of Service,
4.1 (ii) agree that payment made by User to Company (or to an Affiliate of Company acting as an agent of Company) shall be considered the same as payment made directly by User to you.
Uber only considers itself “your limited payment collection agent solely for the purpose of accepting the Fare”. How can they be my payment processor, but create two separate transactions, one with passenger, the other with partner? That would be the same as a grocery store that has a bank charge a higher rate for food directly to customer, then only tell the store they collected less money from customer, then applied their discount rate to the lesser amount reported to grocery store. Would this be legal in that situation?
It appears that Uber is “really excited” to get everyone on UberPOOL, because they are 1.) Charging passengers directly for one service, 2) Creating a separate discounted payment term with partners. It is no wonder they have expanded UberPOOL to areas like San Jose, where the opportunity for more than one passenger pools are significantly lower than in dense cities like San Francisco, but still give Uber an opportunity to skim money off the top, and away from partners. :/
Here are some quick Q/A as when I noted this in some driver forums, a lot of partners were quick to point out “there is some other things you probably are missing here”:
Q: What if that was an estimate on the passengers app?
A: I have confirmed with both passengers, that the Uber email and their bank statements reflect charges noted above
Q: What if they were seeing the "total" for the full UberPOOL between both of them?
A: As noted above, they have confirmed they were fully charged what is seen in screen cap above
Q: What if this was just "This POOL"?
A: I have spot checked with 10+ UberPOOL riders, without going through the whole screen share routine. This is not a one off, see this post for details: http://imgur.com/a/fqDNF
Q: What if it is in the contract that they are not obligated to tell you what the passenger paid?
A: It is in the contract that they are obligated to tell me (Section 4.1 https://uber-regulatory-documents.s3.amazonaws.com/country/united_states/p2p/RASIER%20Technology%20Services%20Agreement%20December%2010%202015.pdf)
This started when I took two passengers from Downtown San Francisco to SFO airport, their pickups were two blocks from each other. One simply asked the other, “I’m paying $32, what are you paying?”, the other replied, “Oh, $31, about the same”. After I dropped them off, I saw my total payout was $16 for BOTH fares! I took a screenshot of one of there phones, and this investigation began!
Special thanks to Jennifer and Alexis in being great sports and letting me test this theory in a very controlled environment, where all data can be collected from all parties without strife!
I am a part time Uber driver, who has been using the service as a passenger for over two years, and as a driver since January 2016. I have over 450 rides completed with a driver rating of 4.91, as of this writing (March 2016). I am still an active driver (for now :eek:).