Uber sued for false advertising by California taxi companies

Uber has made false and misleading advertisements regarding the safety of rides on its UberX platform, and criticized the safety of taxi rides offered by the taxi companies, the 19 firms said in a lawsuit filed Wednesday in the U.S. District Court for the Northern District of California, San Francisco division.

The suit comes in the wake of problems Uber is facing in some countries. On Wednesday, the Frankfurt Regional Court issued a nationwide ban against the company's UberPop service after declaring its business model illegal. Using a smartphone app to connect passengers with private drivers that use their own cars and don't have the required licenses is illegal, the court observed.

In South Korea, Uber's head of operations there, and several drivers associated with the company and a partner are being investigated for breaking local communications and transportation rules.

The false and misleading statements by Uber help the company "line its pockets," but they also cause financial harm to the taxi companies, because their potential customers opt for UberX, mistakenly expecting a safer ride, according to the complaint in California.

The claims against Uber by the taxi companies are quite similar to those in a consumer protection lawsuit filed in December in San Francisco Superior Court by the district attorneys for Los Angeles and San Francisco that accused Uber of misleading consumers over its background checks on drivers. The lawsuit on Wednesday appears to focus instead on the damages to the taxi companies from Uber's allegedly false claims.

The complaint alleges that Uber charges a US$1 "safe rides fee" for each UberX ride, while representing to consumers that the entirety of the fee goes towards ensuring the safety of Uber riders and drivers, as opposed to the company's bottom line or some other aspect of the company, according to the complaint.

The $1 "safe rides fee" was also charged as a misrepresentation by the district attorneys.

Addressing Uber's claims about the safety of its rides and its rigorous background checks of drivers, the taxi companies claim their use of Live Scan, which uses fingerprint identification, is considered "the gold standard of background checks for a variety of reasons." The fingerprint scans are checked with information in U.S. Department of Justice and Federal Bureau of Investigation databases that have "no time-based or jurisdictional limitations," according to the filing.

Uber and rivals Lyft and Sidecar were recently asked by eight members of the U.S. Congress to adopt fingerprint-based background checks of their drivers, which the lawmakers described as "more comprehensive and harder to fake."

"Uber does not require that its UberX drivers take a driver safety training course, nor does it provide any other substantive safety training," according to the complaint. This is said to reflect in the drivers not knowing how to get to even the major intersections in cities and relying almost exclusively on GPS, besides lacking in courtesy and driving unsafely, according to the cab companies.

Uber could not be immediately reached for comment.

The company has been charged with violating the federal Lanham Act, which deals with false advertising, and California's False Advertising Law and Unfair Competition Law. The taxi companies have asked the court for a jury trial and an injunction on Uber's false advertising, besides an award of damages for which the amount was not specified.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com