Uber is on the hook for $10 million after settling a California lawsuit over its misleading statements regarding driver background checks. In 2014, the cities of Los Angeles and San Francisco sued the ride-hailing company for claiming its background checks were the most thorough in the industry. In fact, Uber failed to take drivers' fingerprints like many taxi companies do. Uber says it now takes extra precautions and no longer claims it has the best background check policy.
Under the terms of the settlement, which was approved by a San Francisco judge today, if Uber fails to pay the $10 million within 60 days, the company must pay an additional $15 million. That extra penalty is waived after two years so long as Uber abides by the terms of the settlement, which say Uber may only operate at airports where it has successfully received permission and cannot misrepresent fees it adds to fares. Since the lawsuit was filed, Uber has struck deals with San Francisco International Airport, Los Angeles International Airport, and numerous others in northern and southern California to allow its drivers to drop off and pick up passengers at terminals.
Uber will face a steeper penalty if it doesn't pay $10 million in the next 60 days
"The result we achieved today goes well beyond its impact on Uber," San Francisco District Attorney George Gascón said in a statement. "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."
"We’re glad to put this case behind us and excited to redouble our efforts serving riders and drivers across the state of California," an Uber spokesperson said in a statement. The lawsuit first arose when Gascón's office discovered 25 instances of Uber drivers with serious criminal backgrounds. In February, Uber was forced to change the name of its misleading "safe ride fee" to a "booking fee" and pay $28.5 million to settle two consumer class action lawsuits over its background check policy. The company's legal troubles are not over; in June, a separate class action lawsuit goes to trial in California over the classification of Uber drivers as contractors instead of employees.