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California cities sue Uber for misleading customers about driver background checks

California cities sue Uber for misleading customers about driver background checks

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Los Angeles and San Francisco are suing ride-sharing startup Uber for making misleading statements and breaking California law, the latest in a series of setbacks for the company. In a statement, the two cities' district attorneys say that Uber misled passengers about the effectiveness of its background checks, misrepresented fees for safety checks and airport tolls, operated in airports without permission, and did not get state approval for the system it used to calculate pricing.

"Uber has refused to comply with straightforward California laws that protect consumers from fraud and harm," said district attorneys George Gascón and Jackie Lacey. "These companies can be innovative in the way they deliver services without ignoring the laws that protect the public." The news comes days after Portland, Oregon filed suit against Uber for launching service without the city's permission, threatening thousands of dollars in fines to drivers. And abroad, Spain, Thailand, and India have all ordered it to cease operations.

Uber led customers to believe its background checks were the best in the business

Uber, which launched in San Francisco in 2010, has been fighting local governments from the start. It circumvents traditional taxi organizations, and critics have questioned whether it sufficiently vets its operators, a concern that's been exacerbated by periodic sexual assault accusations against drivers, an accidental death, and one violent attack on a passenger. In their complaint, Gascón and Lacey say that Uber's marketing materials and a $1 "Safe Rides Fee" led customers to believe that it ran exceptionally rigorous background checks on drivers before letting them on the road. But they say that Uber does not include a fingerprint check that would stop drivers from passing off someone else's identification as their own, and that it put out misleading information after allowing convicted criminals to become Uber drivers.

Gascón and Lacey initially sent letters to Uber, Lyft, and Sidecar earlier this year, threatening legal action. In this complaint, they are requesting that Uber comply with California law and provide restitution to customers, paying a $2,500 fee per legal violation and refunding any Safe Rides or Airport Toll fees that they collected.

Uber wasn't the only ride-sharing app to come under fire today. A complaint was also filed against Lyft, which the cities also accused of misrepresenting background checks and operating without approval. But Lyft, it turns out, has already settled. A separate press release said that the company had agreed to cease any misleading statements, submit its app for government approval, and get permission before operating in airports. Additionally, it will pay civil penalties of $500,000, half of which will be waived after a year if Lyft has met all the other terms of the settlement.

In a statement, Uber spokesperson Eva Behrend defended the company. "Californians and California lawmakers all agree — Uber is an integral, safe, and established part of the transportation ecosystem in the Golden State," she wrote. "Uber has met with the district attorneys to address their concerns regarding airport operations, the uberPOOL product, background checks, and operation of the app. We will continue to engage in discussions with the district attorneys." Lyft, meanwhile, celebrated its agreement, which it said "demonstrates our shared commitment to consumers and innovation."

Update 7:04PM ET: Added Uber and Lyft statement.