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Uber agrees to pay up to $25M for misleading customers in California over its safety

TechCrunch TechCrunch 7/04/2016 Jon Russell

Uber has agreed to pay up to $25 million to California-based prosecutors to settle a case in which the ride sharing giant is accused of misleading consumers around the safety of its service.

The civil lawsuit, filed in December 2014, took issue with Uber’s background checks of drivers in Los Angeles and San Francisco. Specifically, Uber billed its checks as “the gold standard” that made its service the “safest ride on the road.” However, investigations uncovered at least 25 instances in which an approved Uber driver had serious criminal convictions, including identify theft, burglary, child sex offenses and even one murder charge.

Uber was also accused of misleading drivers around fees for airport rides. The company began charging a $4 fee for passengers being collected from or going to California airports. Prosecutors found that the “toll” wasn’t being passed on to the airports, while it also worked at some airports were it was not authorized.

The settlement money is divided into two: Uber must first pay $10 million to district attorneys in LA and San Francisco. The remaining $15 million will be waived if it complies with terms of agreement over the next two years. That mainly focuses around the company’s marketing of its service. Uber said in a statement that it has changed the misleading descriptions of its service, while it has also adjusted its airport toll charges and now only offer services at airports where it is permitted to.

“We’re glad to put this case behind us and excited to redouble our efforts serving riders and drivers across the state of California,” the company added.

Uber has raised multiple billions of dollars from investors, so $10 million — or even the full $25 million — is just a drop in the ocean. But the prosecutors argued that this case sets an important precedent: startups don’t have license to mislead consumers or ignore regulations.

“The result we achieved today goes well beyond its impact on Uber,” San Francisco District Attorney George Gascón told the San Francisco Chronicle. “It sends a clear message to all businesses, and to startups in particular, that in the quest to quickly obtain market share, laws designed to protect consumers cannot be ignored. If a business acts like it is above the law, it will pay a heavy price.”

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