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Uber admits underpaying drivers

Companies
Washington - Uber admitted Tuesday that it had collected tens of millions more from New York City drivers than it should have over a nearly three-year span dating back to November 2014, but pledged to reimburse "every penny," in the latest setback for the Silicon Valley ride-hailing giant.

Tens of thousands of drivers in New York City were short-changed, Uber acknowledged, and will now collect an average of $900 each in reimbursements, which includes interest on the lost earnings.

"We are committed to paying every driver every penny they are owed - plus interest - as quickly as possible," said Rachel Holt, Uber's regional general manager for the US and Canada, in a statement. "We are working hard to regain driver trust, and that means being transparent, sticking to our word, and making the Uber experience better from end to end."

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Read also: 'Get rid of Uber or face bloodshed' 

The problem stemmed from the company's failure to adhere to a 2014 change in the way it calculated its commission, according to Uber officials. The company said it noticed the problem after announcing a new route-based pricing system Friday, and rolling it out this week.

The Wall Street journal was first to report on the issue.

As a result of the procedural error, Uber was taking its 25 percent cut based on what is known as the "gross fare," which includes New York City's 2.5 percent black car fund fee and the city's 8.875 percent sales tax. Uber's share should have excluded the tax and fee calculations.

According to Uber, that means that for a $100 trip, where the black car fund and sales tax would total about $11, Uber should have pulled 25 percent of the remaining $89. Instead, Uber said, it was pulling 25 percent of the original $100.

Uber said it's investigating whether the same issue occurred in other markets, but had not uncovered any evidence that it had by Tuesday afternoon.

 

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