CHICAGO (CN) - A taxi-service smartphone app charges a 20 percent gratuity, but the cab companies and their drivers do not get the full fee, a class claims in court.
Uber Technologies sells a smartphone app that enables consumers to arrange and pay for cab rides electronically with a credit card, according to the complaint in Cook County's chancery court.
The company's website, app and email receipts allegedly indicate the addition of a 20 percent gratuity or service charge to the metered fare.
"Defendant does not however remit the full 20 percent of the charge that defendants represent to consumers, including plaintiff and the class, is a 'gratuity
' to the taxi driver/owner and/or company actually providing transportation service," according to the complaint (emphasis in original). "Instead, defendant keeps a substantial portion of this additional charge for itself as its own additional revenue and profit on each taxi ride arranged and paid for by consumers, including plaintiff and the class, using defendant's app."
Lead plaintiff Caren Ehret notes that Uber takes pains to differentiate between the metered fare and the 20 percent charge, but it still hits the customer in the same place.
"By retaining a substantial portion of the so-called 'gratuity
,' defendant effectively increases the 'metered fare,'" according to the complaint. "This is false price advertising at its most pernicious and flagrant violation of the act. Further, in this way, defendant conceals that it is passing along to plaintiff, the class and the fare paying public credit-card processing fees in violation of city of Chicago ordinances/rules applicable to taxi-cabs."
Ehret says she would not have arranged and paid for a cab ride using Uber's app last month, had she known the truth about the 20 percent fee.
"Since it began operating in Chicago, defendant has systematically defrauded consumers in this same way," the complaint states. "Upon information and belief a class of over one thousand have arranged and paid for over one thousand [sic] using defendant's app in the same manner as plaintiff, as replicability and repeatability is the essence of defendant's business model."
The class seeks punitive damages and an injunction requiring Uber to truthfully advertise and charge for the full price of the transportation services arranged.
It is represented by Hall Adams.