Private investigators hired by local cab companies succeeded in bypassing the Uber app and negotiating rides with several drivers directly, according to Houston’s KHOU News.
The cab companies say this demonstrates the danger that ride-sharing services pose to consumers, since Uber’s insurance only applies to rides arranged through its app.
In a press release, the Taxicab, Limousine and Paratransit Association (TLPA), an industry trade group, says that while “such ‘cash trips’ are a common occurrence in the traditional taxicab industry…the insurance provided by ‘ride-sharing’ companies Uber and Lyft will not cover these cash trips.” (RELATED: Uber Wars: How Regulations Almost Froze Out a Brilliant Innovation)
The TLPA press release also notes that, “both ‘ride-sharing’ drivers and passengers have a financial incentive for cash trips—they’re cheaper for passengers and more profitable for drivers,” since drivers avoid paying a 20 percent fee to Uber and can pass along part of the difference to customers.
Uber freely admits that its insurance policy only applies to users who go through its app and abide by its terms of use, but objects to the notion that street hails are an inherently problematic aspect of its business model. (RELATED: After Uber Ousting, is DC More Free Than the Old Dominion)
In a statement made to KHOU, a spokesman for Uber explained that, “driver partners are banned from using the Uber platform if they are found to be in violation of (company) policies,” which specifically prohibit street-hails.
The sting operation conducted in Houston is part of a larger struggle, being waged at the state and local levels, between ride-sharing services and established taxi companies.
Uber does not own or provide any vehicles, instead serving as a middleman to connect passengers and drivers, allowing it to get around regulations that severely restrict competition among traditional taxi services.
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