Why Uber Is So Controversial

Uber is a ride sharing network that launched in 2012. It was built to circumvent the expensive and substandard service of monopoly cab companies. Uber revolves around unlicensed/non-taxicab drivers providing taxi-like services but using newer personal vehicles instead of decrepit old yellow rustbuckets. 

Instead of radio dispatch and local offices, Uber uses smartphone connectivity that dispatches rides, tracks fares, bills customers, and pays the drivers.  Uber is run entirely as a virtual company, with its drivers being outsourced contractors.

Amateur and professional drivers around the world join Uber by passing through online screening and offering the use of their personal vehicles. Uber drivers are not required to pay the exorbitant licensing fees and meet the rigorous controls of municipal taxi cab providers.

Uber has met regulatory roadblocks in many places.  Uber is banned in Spain and Italy but is legal in Canada, the USA, and parts of Europe and Asia.

Below is a list of the major controversy points around Uber, and an explanation behind each argument.

01
of 06

Taxi Cab Drivers Hate Uber.

Spain: taxi cab drivers hate Uber
Spain: taxi cab drivers hate Uber. Pablo Blazques Dominguez / Stringer/. Getty

n every major city, you will hear about protests against Uber by cab companies and other individuals with grievances about Uber service.

The controversies include a range of accusations, including:

  1. Uber unfairly undercuts taxi cab fares.
  2. Uber unfairly bypasses operating fees.
  3. Uber has inadequate safety standards and background checks for their drivers.
  4. Uber surge pricing is a gouging tactic.
  5. Uber has inadequate insurance.
02
of 06

Uber Is Undercutting Regular Taxi Driver Fares

Uber undercuts taxi fares
Uber undercuts taxi fares. Jetta Productions / Getty

The spearhead controversy:  Uber rides are cheaper than taxi rides. This is threatening to taxi cab drivers, as you might guess. 

While the rates vary with the city and the time of day, there is substantial public data that shows UberX ridesharing can be 25% to 50% cheaper than taking a local taxi cab.  

Surge Pricing: this is another concern we will address further down this page.

Remember:  Uber does not support tipping; any Uber gratuity is considered in the cost.  Taxi cabs, on the other hand, expect a 15% added tip beyond the metered fare. 

Sources of comparison data:

Why are Uber prices commonly lower than taxicabs?  Because Uber operates as a virtual online network instead of a bricks and mortar garage, it has much less operating costs. The cost savings are passed onto the customer as reduced fees.

    03
    of 06

    Uber Bypasses the Huge Taxi Cab Fees for a Driver to Become Licensed

    Taxi drivers pay huge monthly fees. Uber drivers do not.
    Taxi drivers pay huge monthly fees. Uber drivers do not. Spencer Platt / Getty

    In large cities, taxi cab drivers pay $500-$1200 per month to their parent company and to the city. This cost includes dispatch and administration services, and any additional fees that the taxi company chooses to levy on its drivers.

    Uber does not charge any of these monthly fees of its drivers. This is part of why taxi drivers hate Uber, and why so many amateur drivers are attracted to driving for Uber.

    Uber requirements: if you are 21, possess a clean driver record and criminal record, have a car that is less than ten years old, and if you have fifty dollars cash, you can theoretically become an Uber driver.

    Uber will confirm that you are legally able to drive in your city, have basic liability insurance with minimum coverage consistent with your local laws and that your car is licensed and possesses 4 doors.

    Your vehicle will need to pass a mechanical inspection at an approved technician's shop  (the $50 cash fee you will need to fork up). 

    The Uber background check will look into the last 7 years of your criminal history, where Uber will look for serious infractions like excessive speeding, driving while intoxicated, sex crimes or other criminal offenses. 

    So, in short:  if you're an honest person with a newer 4-door car, and if you're a reliable and safe driver, you can be an Uber driver within two weeks.

    As one might guess, a taxi driver who has spent tens of thousands of dollars to earn himself a taxi license is unhappy with amateur drivers bypassing these costs.

    04
    of 06

    Uber Has Weaker Background Checking and Safety Screening than Taxi Cab Companies

    Uber allegedly has easier background checks than taxi companies
    Uber allegedly has easier background checks than taxi companies. Getty Images

    Uber has been accused of inadequate screening and background checks when it accepts new drivers.  

    In the USA, taxi companies employ what is called a Live Scan fingerprinted background check, a standard for vetting teachers, doctors, paramedics, and any professionals who work in high liability environments. Live Scan searches US Department of Justice and FBI databases for the last 10 years.

    Instead of Live Scan, Uber uses Hirease.  This investigation service does not use fingerprint records; instead, Hirease searches by credit agencies and social security numbers. Hirease searches only go back 7 years.

    Furthermore, UberX drivers do not need to actually meet an Uber interviewer to become a driver.  The application process is completely virtual.

    05
    of 06

    Uber Is Accused of Price-Gouging with Surge Pricing

    Uber 'surge pricing'
    Uber 'surge pricing'. screenshot

    Uber is only 3 years old and has had many growing pains from its trial-and-error experiments.

    Surge pricing is when Uber dramatically increases fares during peak times to incentivize drivers to be available.  This was particularly troublesome during the Hurricane Sandy crisis in 2012.  Uber raised their fees to motivate drivers to go out into the storm.  Uber customers complained very loudly, and now surge pricing is one of the distasteful experiences that you might have with Uber.

    Note: surge pricing is never a surprise to Uber riders. The Uber smartphone app does clearly display what the price increase is before you accept the ride offer.

    06
    of 06

    Uber Insurance and Driver Insurance: Will It Really Cover You When You Need It?

    Uber: drivers carry personal liability insurance
    Uber: drivers carry personal liability insurance. Image Source / Getty

    There are two aspects to this insurance controversy:  

    1. Will an Uber driver's insurance policy withhold coverage if he crashes while ferrying a passenger?
    2. Will Uber itself offer to cover a driver's needs should their insurance fail to cover them?

    In summer 2015, a Toronto Uber driver had this terrible insurance experience when his minivan was struck at an intersection.

    So, Where Does That Leave Us? Is Uber a Bad Choice?

    As one consumer, I would strongly suggest that Uber is an excellent business model but with imperfect management. It is definitely a good new alternative to the rotten and entrenched taxi provider industry. While some of the trailblazing business choices of Uber are real missteps (surge price gouging, questionable marketing tactics), the ride sharing business model is a real winner. I look forward to the next startup company that takes these Lessons Learned and runs with them, and that's the ride sharing company I will be giving my business to.