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Uber Sued By Taxi And Livery Companies In Chicago For Consumer Fraud And More

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It’s no secret that Uber’s disruptive on-demand car and taxi service is ruffling the feathers of the taxi industry. It seems that in every city in which Uber launches, there’s legal pushback from the industry that the startup is disrupting. We’ve seen this in D.C., San Francisco, New York and Boston. Today, Chicago joins the mix, with a new lawsuit filed by a group of taxi and livery companies in Chicago.

For background, in April, Uber expanded beyond just offering black cars in Chicago to including Taxis on its app. Via the app, riders can see which taxi cabs are close to them on the map of the Chicago area. Similar to the way you order a black car via Uber, you simply choose the taxi and waiting time that works for you, set your exact location and then you’ll receive a message when the taxi driver has arrived at the location. At the time, Uber was recruiting taxis directly on a driver-by-driver basis.

According to a release issued by the parties, Uber is being accused violating multiple Chicago and Illinois laws designed at protecting public safety, consumer protection and fair practices. The complaint also alleges that Uber is using deceptive business methods to confuse its customers.

The complaint charges that Uber is not inspecting taxi vehicles to make sure they comply with city and state regulations and does not ask potential taxi drivers if they are properly insured. The lawsuit also alleges that Uber claims it works with “fleet partners” when Uber actually works directly with drivers in its taxi service. The taxi and livery companies says that Uber is deliberately trying to confuse customers and “cash in on the taxi companies’ good name, trademarks and reputation.”

To be honest, Uber has always been open that they work with drivers, not the companies, so I’m not sure where the misrepresentation is taking place. Even within Uber’s app, the car service startup doesn’t specify which Taxi company each available taxi is hailing from.

Other claims in the lawsuit include that Uber charges a “20% gratuity” for all taxi rides, but only half of the “gratuity” goes to the driver, which the taxi companies say violate city ordinances by charging more than the statutory set rates displayed on the taxi meter. We’re told by Uber; however, that riders do pay 20% gratuity but this passes through to the driver. In turn, drivers pay Uber a service fee per ride for bringing the driver the additional business, which seems fair.

Additionally, the lawsuit contends that in Chicago, Uber mischaracterized its methods of operation in order to acquire a dispatch license and failed to disclose on its dispatch license application that it has no agreement with any taxi affiliations as required by Chicago ordinance.

Also, Chicago taxi drivers are prohibited by city and state law from using cellular telephones or other electronic devices, whether or not hands-free, while operating a cab and Uber requires drivers to use an iPhone and then call the customer using a cell phone to arrange the pickup.

It’s hard to tell how much weight these claims hold without knowing the intricacies of Chicago’s city and state laws regarding taxis. But as we’ve seen with the response from taxi companies and commissions in other cities, Uber is facing a battle because the company is disrupting an age-old sector. Taxi companies are seeing how competitive Uber is becoming in each city, and bringing out the knives to fight.