Uber's simple math mistake will cost it tens of millions of doll - FOX 8 WVUE New Orleans News, Weather, Sports, Social

Uber's simple math mistake will cost it tens of millions of dollars

© iStockphoto.com / Denise Torres © iStockphoto.com / Denise Torres


By Bill Murphy Jr.


Someday, Uber will have a fleet of self-driving cars. Then, they'll probably cast aside the pesky human drivers they relied on to make their multi-billion business possible.

Until then, however, they're stuck. Their relationship with their army of pseudo-employee drivers has always been difficult, and the news Uber announced Tuesday might not make things better. For the two-and-a-half years, you see, Uber has been (accidentally, we trust), shortchanging its New York City drivers' pay.

It's all the result of a simple math or accounting error. In short, Uber paid itself a commission based on the gross fees that Uber X customers paid for each ride. But they were actually supposed to be calculating their commissions based on the net--meaning the gross, minus the taxes and workers compensation payments that are factored into each fare.

Here in New York, the taxes are steep, and that means Uber drivers were getting ripped off with each trip.

The difference worked out to about 2.6 percent, which isn't all money in the world from the driver's perspective. But the whole problem stretches back to November 2014, when its current deal with New York City drivers went into effect, and it adds up to "tens of millions of dollars," as Uber explained to Quartz, adding:

"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. We are working hard to regain driver trust, and that means being transparent, sticking to our word, and making the Uber experience better from end to end."

And that means that in New York City, "tens of thousands" of current and former Uber drivers will be paid an average of about $900 each.

Interestingly, the error came to light when Uber went back to change its terms of service again, doing away with its percentage-based commissions in favor of another controversial calculation. Now, they'll be charging passengers according to the route they take, as opposed to the length of the ride.

The original "Uber's simple math mistake will cost it tens of millions of dollars" article can be seen here.

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