Uber admitted on Tuesday that it underpaid its New York City-based drivers by millions of dollars over the past two and a half years, according to a report by The Wall Street Journal. The ride-hailing company said it had “mistakenly” over-calculated its cut of commission, taking roughly 25 percent from fares before taxes, when it was supposed to do so after local taxes and fees as stated in a driver’s agreement in November 2014.
“We made a mistake and we are committed to making it right by paying every driver every penny they are owed, plus interest, as quickly as possible,” Rachel Holt, Uber’s regional general manager in the US and Canada, told WSJ. The accounting error is estimated to cost Uber up to $45 million in refunds.
The error is estimated to cost Uber up to $45 million
The news comes just under one month after a lawsuit in Los Angeles claims Uber shortchanged drivers by calculating two different fares for drivers and riders and pocketing the difference. This follows an app update last summer when Uber introduced upfront fares that pre-calculated how much a trip would cost a rider depending on current demands and traffic conditions, doing away with a visible Surge Pricing notification. In an example to the Los Angeles Times, one passenger receipt showed that a rider was charged $54.80 for a trip to LAX airport, but Uber calculated the fare to the driver as $43.55, resulting in a net earning of $32.89. An Uber representative admitted fares can differ between drivers and riders, but did not comment further.
Uber told WSJ that it will refund affected New York City drivers an average of $900 each, which includes interest on the loss profit over the past years. Drivers are eligible for a refund if they have completed a trip since signing the 2014 agreement, regardless of whether they’re still actively driving for Uber.