FLORIDA:Uber/Lyft Predatory Minute & Mile Pricing is Below Drivers' Operating Costs

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This grievance is about the fare rate reduction practices mostly affecting full-time drivers with the vehicle platforms: UberX, UberPool, Lyft and LyftLine.  Uber has lowered the mileage & minute rate algorithm below operating costs using Section 4.2 pg. 7 (Changes to Fare Calculation) in their contract in competition with Lyft after defeating the Taxi Industry. Fare rates are supposed to compensate vehicle operational, depreciation and replacement costs in addition to personal expenses. Both companies take a 20-25% commission from the total fare along with rider booking fees but compete for customers manipulating the fare rates instead of using their earnings from commissions and booking fees. Uber has instigated the predatory pricing while Lyft is liable for following Uber's lead and not filing an antitrust case but has not since both companies don’t own vehicles to absorb any liabilities or losses. Both companies also misrepresent earnings by using hourly income incentive tactics not relevant to transportation. This applies to all drivers nationwide as independent contractors responsible for their own expenses. Operating costs are supposed to be paid before personal expenses but the fare rate low income forces drivers to do the opposite.

Drivers lacking self-employment experience and profit unfortunately went to employment attorneys looking for employee status and overtime compensation or do nothing believing this is normal. Most all drivers come from hourly or salary unemployment and did not opt-out of Uber’s contract Arbitration Agreement (Section 15.3 viii – Pages 15-21) within 30 days. The contract was executed in bad faith as Uber either does not know how the Transportation Industry operates or is taking advantage of drivers lacking business operating practices making the arbitration agreement non-enforceable. Lyft has a similar contract and is also liable for the same. This argument as Independent Contractors is strong as we are responsible for our own expenses when we get rid of the employee mentality. Antitrust attorneys will not take this case as drivers are not competitors and neither will employment attorneys because of antitrust practices. Uber started improving when CEO Travis Kalanick resigned but their current efforts are not enough as many suffered monetary damage.

I have been self-employed since 2010 financing work vehicles before Uber started in 2014 and in good faith used Uber's $2,000 dealer rebate to finance a new vehicle to work full-time. I traded a 2013 Elantra in November 2015 with 56,702 miles for the same model 2016 knowing the 2013 100,000 mile warranty will void in over a year. I stopped working full-time at the end of April 2016 (5 months) when 14,000 miles was reached with no ability to overpay the loan at the rate of depreciation. UberPool started on 11/19/2015 and depreciated the 2016 car's value to $10,000 (NADA) owing $19,000 with 30,000 miles at the end of 2016. I have to be selective with other driving jobs fearing additional mileage depreciation and allow time to catch up with the excess mileage. The only times worth working with Uber or Lyft is when dynamic pricing is offered otherwise it not worth the effort. The riders' destination is shown when the trip starts and drivers are faced with rejecting long distance trips knowing the fare won't cover operating costs or after calling the rider to determine the destination before going to the rider. New drivers are always in demand because the existing ones can't maintain and lose their vehicles or realize the income is not worth it. I am advocating for Uber & Lyft to raise the mileage & minute rate app algorithm to more than $1.50/mile after commission and for lawmakers to ban Arbitration Agreements from sign-on contracts as it allows them to do as they wish without fearing repercussions. ALL the issues below can be solved by raising the rate algorithms to where they need to be and shows how they are acting in bad faith.

1.                   COST OF DOING BUSINESS: The following prices show the drastic difference between uberPool, LyftLine, UberX and Lyft four passenger vehicles compared to six passengers and luxury vehicles. The rates more than doubles from four to six passengers.

SOUTH FLORIDA RATES:

Base:$0.95, Minute:$0.10, Mile:$0.81 uberPool

Base:$0.95, Minute:$0.13, Mile:$0.91 uberX-Lyft (seats 4)    

Base:$2.00, Minute:$0.30, Mile:$2.01 uberXL-Lyft Plus (seats 6)

Base:$2.50, Minute:$0.40, Mile:$2.41 uberLUX

Base:$5.00, Minute:$0.80, Mile:$4.76 uberLUX SUV

**LyftLine pays drivers the same rate as Lyft

a.       Standard Rates: Earnings need to be over $1.50/mile calculating the time & distance algorithm after their commission to be profitable. Fares are currently $0.91/mile and $0.13/minute with over-saturated drivers to justify rate reductions. Short distance trips are more profitable paying around $1/mile locally and $0.80/mile using highways with traveling more than 1,000 miles/week to make $700-800. Rate changes are announced through their app before being able accept trips. Not accepting their terms leads to not being able to work which is not fair for those who financed new vehicles to work full-time. This is a breach of contract (Section 4.2 pg. 7 Changes to Fare Calculation) as they should compete for customers from their commissions and booking fees instead manipulating rates belonging to the vehicle and driver.

"Changes to Fare Calculation: Company reserves the right to change the Fare Calculation at any time in Company’s discretion based upon local market factors, and Company will provide you with notice in the event of changes to the base fare, per mile, and/or per minute amounts that would result in a change in the recommended Fare. Continued use of the Uber Services after any such change in the Fare Calculation shall constitute your consent to such change."

*Uber raised their mile rate from $0.85 to $0.91 on 06/21/2017 after CEO Travis Kalanick resigned and Uber launched a “180 Days of Change” campaign with Lyft raising theirs on 07/21/2017.

b.      UberPool & Lyft Line: Riders are offered lower fixed prices by sharing the trip with other possible riders heading in the same direction paying drivers $0.75/mile and $0.10/minute introducing the 12 hour work day to earn more than $100. 

*Lyft on 07/13/2017 raised the Lyft Line rates to match Standard Lyft rates without affecting riders. 

2.                   EXCESSIVE MILES: Mileage depreciation is not taken into account allowing riders to book long distance trips between counties and farther. Highway travel requires covering longer distances in less time at a loss from the start of the trip. Finding return trips or working far from home base at an additional loss and worst traveling back with no compensation (dead trip). It is possible to accumulate more than 30k miles a year under these platforms. Riders are required to enter their destination before pickup but drivers can’t see it until the rider is in the vehicle. Long distance trips were not mentioned when recruiting as they advertised the platform as ridesharing. The excess miles cannot be claimed during tax season to reduce the vehicle principle nor have savings from taxes owed because of lack of profit. 

3.                   WORK SCHEDULE: Uber claims their benefit is being able to work your own schedule but isn’t true with low fares. Drivers have to work at least 12 hours to earn more than $100 or when hourly guarantees & price surges are offered during morning/evening rush hour, weekend evenings starting Thursday and all day Saturday/Sunday in the areas specified. Emails are sent every week announcing which areas to drive in having to travel there with no compensation. With hourly guarantees & price surges offered at specified times, drivers work during those times avoiding other times of the day conflicting Uber’s work your own schedule” statement. In addition, long distance trips can’t be expected if working part-time for a couple of hours with no return fare. 

4.                   FALSE ADVERTISING:

a.        *Hourly Guarantees: Uber misrepresents the pay structure by lowering the minute and distance algorithm to equal around $10/hour after totaling the fare then offer hourly guarantees to cover the difference if it isn’t earned though trips. Vehicles don’t operate by the hour as mileage and depreciation factors are involved which can range a lot depending on how many miles were driven within that hour. $35/hr divided by $1.50/mile equals 23 miles that can be traveled within that hour to be profitable. Furthermore, night travel can add more miles in an hour, especially on highways making $35/hour worthless.

b.      *Dynamic Pricing: Uber says “This encourages more drivers to get on the road and head to areas of the city where demand is high for rides”. This feature is falsely advertised because the Dynamic Pricing zone disappears when their GPS senses enough drivers in the area leading to “wild goose chases”. Drivers turn off the app in known busy areas to wait for dynamic pricing to appear to turn on the app and take the higher fares. Surge pricing would not be necessary if fares were more than $1.50/mile as drivers would profit in all areas they want to drive. Dynamic pricing also affects riders as rates are increased when services are needed most and can be viewed as predatory. 

*Hourly Guarantees & Dynamic pricing apply to the driver closest to the requesting rider and not applicable to the next rider if the first riders destination is outside of the promotion zones. These tactics would not be necessary if fares were where they are supposed to be. 

c.       UberPool Earnings: UberPool was offered on 11/13/15 as an option by watching a video and taking a quiz but in fact cannot be terminated if drivers decide to opt-out. Uber claims drivers earn money during trips and on the way to pick up additional riders at $0.75/mile & $0.10/min. which is not profitable especially when extended to all of South Florida on 03/31/2016. 

d.      Misleading Ads: Uber targets supplemental income earners when full-time drivers make up the majority of the workforce. Uber says they have drivers with no complaints but those are part-time earners who don’t notice their vehicles’ depreciation because of unrelated jobs and the vehicle parked throughout the day. Part-time drivers mostly work after business hours where full-time drivers work throughout the day during morning and evening rush hour. 

5.                   NEW VEHICLES: Newer vehicles less than seven years are required to work where there are four possibilities of obtaining and paying off the vehicle.

a.       Cash Vehicle: This is the most difficult to obtain in new condition and will come with little or no warranty on used models. 

b.      *Used Vehicle Financing: The principle will be lower but with higher interest rates as banks consider these vehicles as high risk due to little or no warranty and higher chances of breaking down. Drivers lose more if the vehicle breaks due to lack of income, repair costs and financing on a broken vehicle. 

c.       *New Vehicle - 36mo Financing: This is the most expensive financing option as the monthly payments would be extremely high but the vehicle would be paid off by the time the warranty expires. 

d.      *New Vehicle - 60-75mo Financing: This option allows making minimum payments but requires over-payments to keep up with mileage depreciation and the ability of trading-up to a new vehicle when 60k miles are reached which is within the limits dealers desire to resale as Re-Certified. Vehicles reaching 100k miles will have no warranty before the vehicle is paid-off within three years leading to upside-down financing. 

*These options are subject to credit worthiness and may have high interest rates making monthly payments higher for the same vehicle. Uber offered rebates to finance new vehicles only to be set-up to fail. These are noncommercial vehicles and earnings need to cover personal and business use. 

Fares need to cover the ability to profit and overpay bank loans and major maintenance as financing and credit worthiness is not easy to have. 

6.                   RENTALS/LEASING: Rental or leasing options are available with conditions that payments are deducted from weekly earnings before income is received. I have not used this option but know drivers that pay $222/wk for Hyundai Elantra and Nissan Sentra models committing them to work only for Uber. Another instance is when drivers lose their vehicle to mechanical failure and switch to this platform to continue working. This is unethical as drivers are committed with Uber if they need a personal vehicle. This would not be necessary if the operational, depreciation and replacement costs could be afforded through higher rate standards. It is rumored rental and leased vehicles get trip preference to collect the weekly rental or lease payments which I can’t confirm but appear circumstantial. 

7.                   RIDESHARE INSURANCE: Rideshare insurance required under SB 340 is more expensive than personal insurance policies making their pay structure not sustainable to operate within the law. My six month personal insurance costs $1,597.57 and got quoted $2,781 for rideshare insurance. 

8.                   MISCELLANEOUS EXPENSES: Tolls and cleaning fees are reimbursed through riders but the reimbursements are lost to other expenses. Tolls get deducted from SunPass accounts and when the low balance limit is reached triggers the replenishment amount which is more than the tolls taken by riders over a period of time. Cleaning fees fall under the same circumstance as other expenses get prioritized over cleaning your vehicle.



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