Chicago, IL: A consumer fraud class action lawsuit has been filed on behalf of Chicago passengers against Uber, a San Francisco-based taxicab service that hails sedans and taxis through a smartphone app.
The complaint charges Uber with false price advertising through lack of honest transparency and focuses on customers who have been wronged by Uber's misleading business practices. The complaint further outlines how the company's use of the term "gratuity," rather than describing it as "metered fare" or "service charge," is deceptive since Uber makes a profit from the charge.
The lawsuit alleges that "in its internet posting and on its app, both forms of advertising of its sale of merchandise under the Act, (Uber) represents its 'Hassle-free Payments' as follows: 'we automatically charge your credit card the metered fare +20% gratuity.'" However, the "gratuity" charge includes the company's fee and credit card fee along with the driver's tip and Uber does not disclose their fees nor explain where the money is going. Chicago taxi ordinances prohibit taxi companies from charging anything more than the regulated meter rate.
The lawsuit alleges that Uber's practices are "false, misleading and likely to create confusionÂ…because the term 'gratuity' connotes a sum paid to the taxi driver/owner in recognition of transportation service that is distinct and different from the metered fare." By keeping a substantial portion of the so-called gratuity, Uber is effectively increasing the fare and engaging in false price advertising. By this measure, Uber's system violates Section 2 of the Illinois Consumer Fraud and Deceptive Business Practices Act through the "misrepresentation or the concealment, suppression or omission of any material fact."
The complaint notes the deceptive practices take place twice during the transaction, both at the beginning and the end of the ride. Before a passenger books a taxi ride through Uber's app, the passenger is deceitfully informed that they will only pay the metered rates with the automatic gratuity. Passengers then again commit to the mischaracterized charges when they pay their credit card charges at the end of the ride without knowing how much of the charge is going towards the driver's tip. Uber's business model is also the subject of an ongoing dispute at the New York City Taxi and Limousine Commission for violating several guidelines and for operating as an unlicensed taxicab service. Uber's entrance into New York has become controversial in part because NYC rules forbid Uber to use its unregulated credit card system, taxi drivers from using electronic devices while driving and prohibits any unjustified refusal of fares. In Washington D.C., the City Council is currently questioning Uber's unregulated status and business practices in a series of public hearings.
The complaint was filed on Monday, October 1, 2012 in the Circuit Court of Cook County.
