Why doesn’t everybody love Uber?

The logo of car-sharing service app Uber over a reserved lane for taxis in Madrid. REUTERS/Sergio Perez
The logo of car-sharing service app Uber over a reserved lane for taxis in Madrid. REUTERS/Sergio Perez

Canadians who love Uber love Uber a lot, praising the low fares, the ease of hailing a cab with an app, the ability to review drivers’ profiles and ratings before getting in a car and not having to carry cash to pay.

 Yet not everybody loves how the San Francisco-based ride-sharing service is reshaping the transportation sector in the cities where it has set up shop. The UberX service empowers anyone over 21 with licence and a car in “excellent condition” to pick up passengers for money after a background check that can take just three days.

Obviously, licenced cab drivers, fearful of their livelihoods, have been the most vocal opponents, waging protests in cities ranging from Toronto and Montreal to São Paulo and Copenhagen, and launching a class action lawsuit over lost income. But it’s not just taxi drivers who are worried. Critics have a long list of concerns about how Uber does business, whether its practices are fair and whether it’s safe for consumers. The sweet deal passengers think they’re getting may be offset by potential risks down the road.

 “The public is not fully aware of what’s happening and how they’re playing by their own rules,” says Jim Karygiannis, the Toronto city councillor who has been sounding the alarm about Uber since he was elected last year. “Can you be an Uber doctor, can you be an Uber teacher, an Uber chef or do Uber liquor delivery? You can’t make pizza in the back of your car and take it over to anybody who calls you. There are standards you’ve got to meet.”

A Beck taxi driver protests Uber in Toronto. THE CANADIAN PRESS/Nathan Denette
A Beck taxi driver protests Uber in Toronto. THE CANADIAN PRESS/Nathan Denette

A new survey by Harris Poll (on behalf of Toronto’s Beck Taxi, so take it with a grain of salt) found that among people who are familiar with UberX, most say it should be subjected to the same requirements as existing taxi services, including police background checks for drivers (87 per cent), commercial insurance that protects drivers (89 per cent) and riders (86 per cent) and regular vehicle maintenance (88 per cent). About 58 per cent of respondents familiar with UberX said the company currently meets these standards.

 The lack of clarity about what Uber is, and what its obligations are, makes it difficult to point fingers and assign responsibility if problems arise. Is it a transportation company? A software company? A booking service? A sophisticated bulletin board? Are the UberX drivers employees or owner/operators? These questions are important because they have implications for insurance, taxation, security, safety standards and quality assurance. About 75 per cent of people surveyed in the Harris Poll viewed Uber as a taxi service more than as a technology company, ride-sharing company or mobile app provider.

An Uber supporter's pin is seen during a rally in front of city hall in Toronto. REUTERS/Chris Helgren
An Uber supporter's pin is seen during a rally in front of city hall in Toronto. REUTERS/Chris Helgren

Karygiannis suggests Uber benefits from all this fuzziness since it makes it hard for government to apply existing laws. The company has said drivers are responsible for collecting GST or HST, but Karygiannis says Uber does not ensure that happens.

“They have shown no respect for laws, rules and regulations, he wrote in an open letter this month, “and even if we ask for compliance, they will find ways to go around these requests.”

 This alleged lawlessness has prompted Uber opponents in places like Sydney Australia, to try to make citizen’s arrests of Uber drivers, though police officers have shown little interest in getting involved. Of course, sometimes laws are bad and unnecessary, but in many cases they prevent harm from happening and when problems do happen, ensure that victims have proper recourse. “Sooner or later, there’s going to be a really bad incident and this is all going to unravel,” says John Papadakis, a Toronto paralegal and former city council candidate who thinks the city should be cracking down on ride sharing.

Although Uber has claimed that its Canadian drivers are covered by insurance, the company is currently negotiating with Intact, one of Canada’s largest auto insurance providers, to come up with a specific ride-sharing product. To critics, this move suggests that currently available insurance policies don’t cover what Uber is doing.

In the US, there has been debate about whether commercial insurance can be turned on or off depending on whether there is a passenger in the car. The president of one Canadian insurance company estimated it could cost $23,000 annual to properly insure an Uber driver. Yet most people don’t think much about insurance when they’re getting into a car—until they find themselves in an accident.

Critics have also cast doubt on Uber’s background checks for drivers, which take as little as three days, faster than police service background checks which typically take five days to a month. While Uber argues that its standards are higher than some cities, the US-based website Who’s Driving You?, an initiative of the US-based Taxicab, Limousine & Paratransit Association (TLPA), keeps a compendium of unsettling incidents that have happened through ride-sharing services.

Concerns about Uber drivers may be overstated or based on anecdotal evidence, but Karygiannis points out that, unlike licensed drivers in Toronto and other cities, Uber cars are not required to have cameras and emergency lighting systems. So when things go wrong, they can go much more seriously wrong. While Uber can bar bad or abusive drivers, the process for revoking a taxi driver’s licence is usually more transparent and accountable. Because the service currently operates beyond the bounds of existing bylaws, the city has little power to create standards for accessibility or more environmentally friendly vehicles.

The popularity of Uber may convince cities to reduce regulations for taxis or to create a second set of rules for ride-sharing services. One oft-cited 1993 study of taxi industry deregulation in selected US cities found that the supply of taxis rose dramatically -and so did prices and the aggressiveness of drivers - even as the quality of service declined. Some of the causes of those problems - the first-come first-serve nature of taxi queues and poor passenger knowledge of pricing and routes - are minor or non-existent when it comes to today’s ride-sharing services.

But considering Uber’s existing surge pricing model, which boosts fares when demand is high, an unrestricted system could more easily lead to gouging, states a report on the sharing economy by the Mowat Centre, a Canadian think tank.

“If Uber is lightly regulated, the regulation gap with taxi drivers is significant,” the report said.

Uber and its drivers can then undercut existing operators with lower prices and more flexibility, driving them out of business and perhaps ultimately raise prices and reduce service levels in a new, less competitive marketplace.”

Then there are the drivers themselves. Like many workers in the new “gig economy,” they have no benefits, no paid holidays and no job security. For many of them, Uber only makes sense as long as the current lopsided playing field prevails. If they met the requirements of licensed taxi drivers, which cost as much as $6,800 annually in Edmonton, maybe they’d pass on the opportunity altogether.

“Someone who… picks up passengers in their car three times a week is unlikely to comply with reams of licensing and legislative requirements. This was as true in 1975 as it is in 2015. The distinction is that in 1975 the scale of this activity was essentially immaterial to government,” states the Mowat Centre report.

But now, through the power of smartphone technology, the stakes are much higher.