Category: transportation

Transportation

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Passenger Right to Record at Airports and on Airplanes? with Mike Borsetti

Passengers have every reason to record airline staff and onboard events–documenting onboard disputes (such as whether a passenger is in fact disruptive or a service animal disobedient), service deficiencies (perhaps a broken seat or inoperational screen), and controversial remarks from airline personnel (like statements of supposed rules, which not match actual contract provisions). For the largest five US airlines, no contract provision–general tariff, conditions of carriage, or fare rules–prohibits such recordings. Yet airline staff widely tell passengers that they may not record–citing “policies” passengers couldn’t reasonably know and certainly didn’t agree to in the usual contract sense. (For example, United’s policy is a web page not mentioned in the online purchase process. American puts its anti-recording policy in its inflight magazine, where passengers only learn it once onboard.) If passengers refuse to comply, airline staff have threatened all manner of sanctions including denial of transport and arrest. In one incident in July 2016, a Delta gate agent even assaulted a 12-year-old passenger who was recording her remarks.

In a Petition for Rulemaking filed this week with the US Department of Transportation, Mike Borsetti and I ask DOT to affirm that passengers have the right to record what they lawfully see and hear on and around aircraft. We explain why such recordings are in the public interest, and we present the troubling experiences of passengers who have tried to record but have been punished for doing so. We conclude with specific proposed provisions to protect passenger rights.

One need not look far to see the impact of passenger recordings. When United summoned security officers who assaulted passenger David Dao, who had done nothing worse than peacefully remain in the seat he had paid for, five passenger recordings provided the crucial proof to rebut the officers’ false claim that Dao was “swinging his arms up and down with a closed fist,” then “started flailing and fighting” as he was removed (not to mention United CEO Oscar Munoz’s false contention that Dao was “disruptive and belligerent”). Dao and the interested public are fortunate that video disproved these allegations. But imagine if United had demanded that other passengers onboard turn off their cameras before security officers boarded, or delete their recordings afterward and prove that they had done so, all consistent with passengers experiences we report in our Petition for Rulemaking. Had United made such demands, the false allegations would have gone unchallenged and justice would not have been done. Hence our insistence that recordings are proper even–indeed, especially–without the permission of the airline staff, security officers, and others who are recorded.

Our filing:

Petition for Rulemaking: Passenger Right to Record

DOT docket with public comment submission form

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Enumerating Uber’s Scandals

Collecting my thoughts for an article about Uber’s mounting scandals and the proper legal and regulatory response, I took some time to review the range of recent concerns. It’s overwhelming — new issues arising daily, and prior problems almost inevitably forgotten. But by dividing the misdeeds into a taxonomy of subject areas, I’m seeing trends — identifying the areas where Uber falls furthest short. I offer my notes to others in hopes that they can help.

My tabulation:

Uber Scandals

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David Dao on United Airlines (teaching materials)

Edelman, Benjamin, and Jenny Sanford. “David Dao on United Airlines.” Harvard Business School Case 917-026, May 2017. (educator access at HBP. request a courtesy copy.)

In widely circulated videos, United staff and Chicago security forcibly remove a passenger from his paid seat on an aircraft, injuring him severely. United leadership must decide how to respond to public outcry.

Teaching Materials:

David Dao on United Airlines – Teaching Note (HBP 917027)

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How to file and pursue a consumer complaint against an airline – and the DOT “formal complaint” process

In the United States, there are seven basic options for a consumer who wishes to pursue a dispute with an airline, travel agent, or tour operator:

  1. Informal correspondence with airline customer relations staff. Easy, usually via web site submission. You’ll typically get a response. (Indeed, US Department of Transportation rules require an airline to send a substantive written response within 60 days.) But there’s no guarantee that the complaint will be handled by someone who truly understands, nor that the response will be helpful or correct. The airline may anticipate that many people complain but few follow up on an unfavorable response — reducing their incentive to provide a full resolution or even conduct a complete investigation. Some customer relations staff may not have sufficient information or training to investigate unusual problems.
  2. Credit card chargeback. This is most useful if there is a recent, easily-provable, and impeccably documented overcharge. In principle, the merchant (airline) is obliged to demonstrate your acceptance of the charge and their performance of the promised service — and in principle the burden of proof is on their side. Furthermore, credit card disputes are adjudicated by card network staff who do not directly report to airline management, reducing some conflicts of interest. Credit card procedures are particularly useful to passengers in case of bankruptcy of an airline or travel agent, obliging the airline’s bank to provide the refund even if the airline cannot, whereas other methods typically are typically unable to assist in that circumstance. Furthermore, a successful credit card chargeback yields a direct payment (refund) to the passenger, with no need to pursue a collection effort against a distant company. Nonetheless, I am told that most credit card disputes are resolved in favor of airlines, as their positions are supported by at least an appearance of reliable records. Moreover, credit card dispute processes make it difficult to challenge records as unreliable or incorrect, or to challenge airline policies as violating law or regulation. These shortfalls make credit card disputes a poor fit for complex matters or unusual allegations.
  3. Litigation, most often in small claims court. Some judges are open to the suggestion that airlines screwed up, broke the law, or even failed to follow their own rules. Of course there’s no guarantee that the judge will be an expert or will be able to take the time to understand the unusual situation you describe or the specialized rules and laws pertaining to aviation. Decisions are usually unpublished and informal, making it easy for passengers’ arguments not to be considered in full.
  4. Pursue special state claims. Some states offer “seller of travel” laws (which could apply based on your residence, the state where the ticket was purchased, or the state where the online travel agency is based). These occasionally provide some recourse or compensation, for example if a travel agency or tour operator goes out of business or absconds with your money.
  5. Pursue any redress available under foreign law. Consider such options if the flight was international (potentially including domestic segments of an international itinerary) or the ticket was purchased from an airline office, travel agency, or tour operator outside the United States. Some countries offer greater protections than the United States. That said, most consumers would face significant difficulties pursuing claims in a jurisdiction where they do not reside.
  6. Informal DOT complaint (via this web form). DOT routes your complaint to a higher caliber of representative from the airline, compared to #1, and sometimes these staff are better positioned to assess your claim, consider the merit in your position, and provide a meaningful resolution. In principle DOT reviews the resolution of each matter, and this oversight or potential oversight imposes causes airlines to be more careful in responding to consumers’ informal DOT complaints. On the other hand, the proceeding is nonetheless secret and off-the-record. Your complaint will do nothing to help anyone else and typically won’t cause a change that fixes the underlying problem. DOT staff are sometimes involved in mediating these disputes, but you can’t count on this kind of assistance. Indeed, the Office of Inspector General found that the DOT’s reviews of passenger complaints are insufficient to determine whether airlines engage in unfair and deceptive practices.
  7. A formal DOT complaint via the process detailed below. These proceedings are formal and on the record. You’ll be corresponding with an airline’s designated representative, typically an attorney. All filings will be published on the web for anyone interested to read, and Airlineinfo and its Twitter feed make it particularly easy for the interested public to find and follow these disputes. DOT staff ultimately prepare a written decision summarizing each party’s position and offering an assessment. These factors increase the likelihood of a full investigation and proper analysis. That said, airlines take the position that DOT lacks authority to order refunds to affected passengers. Furthermore, decisions are often slow, commonly taking a year or longer.

This page elaborates on the seventh option, formal DOT complaints, as this process is not widely understood and not widely used despite its important potential benefits as detailed above.

Filing a formal complaint with the DOT: instructions and what to expect

For those inclined to proceed with formal DOT complaints, here are my tips based on the several such complaints I have filed and based on others’ complaints that I have followed.

There are five steps to filing a formal complaint with the DOT:

  1. Use my Microsoft Word Complaint Template to write your complaint. Explain the airline’s violation as clearly as you can. Use exhibits if needed to support the factual allegations. Consider exhibits to show relevant screenshots, call recording transcripts, ticket printouts, correspondence with customer relations, etc. Be sure to fill in your name in complaint header. On the title page and first page, leave the ___ placeholder (after the year) as docket number in your complaint; a docket number gets assigned by DOT staff after submission of the initial complaint. (If you use the template to file a reply or other supplemental document, insert the docket number then.)Avoid including personal information you do not want to reveal to the public. If needed, you can prepare two versions of the file – one “public” (redacted, for uploading to Regulations.gov in step 4 below) and one private (with ticket numbers, passenger names, etc. for sending to DOT staff and airline attorneys in step 5 below).See sample complaints to confirm format and get a better understanding of typical style.
  2. Find the registered agent for the airline you’re complaining about. Use the DOT’s dockets for agents for service of process for foreign airlines or for domestic airlines, as appropriate. Insert the agent’s name and email onto the Certificate of Service page where indicated. After finding the agent’s name, you may need to use web search to find the corresponding email address. Many large airlines use attorneys at outside law firms as their designated agents. In that case, you can check the law firm’s web site or even call the law firm’s main line to request the attorney’s email address.
  3. Save the Word file into PDF for upload and submission.
  4. File the public version of the complaint on Regulations.gov. Go to the unusually-named Instructions on Filing a Submission to DOT–OST for applications/petitions/exemptions and any other items for which a Docket does not exist. Press the Comment button, then submit your complaint.  Suggested title: “Third party complaint of [your name] – [airline name] – [date]”.  Suggested comment: “Please see attached complaint”. Use the Attach Files command to submit the public version of your complaint PDF.  Provide your email address, first name, and last name when prompted.  It is optional to provide your contact information through the Regulations.gov submission tool. Note the Comment Tracking Number that results from your successful submission. Although Regulations.gov uses the term “Comment” during the submission process, your complaint will actually be posted as its own docket, not as a comment to any preexisting docket.
  5. Serve the private version of the complaint on the airline’s agent and on the DOT by email:

    To: [agent email from step 2], blane.workie@dot.gov; robert.gorman@dot.gov; kimberly.graber@dot.gov

    Subject: Third party complaint of [your name] – [airline name] – [date]

    Greetings,

    A redacted public complaint (as to certain practices of [airline name]) was filed on Regulations.gov earlier today. Attached is the full version including private information.

    Regulations.gov Comment Tracking Number: [insert comment tracking number]

    Thank you,

    [your name]

The DOT contacts change from time to time. The three DOT contacts listed above are current (to my knowledge) as of October 2016.

Here’s what to expect after filing:

Once your complaint is docketed at Regulations.gov, you’ll usually get an email from DOT staff to that effect. If not, wait a few days, then run a search for your last name on Regulations.gov. Each Regulations.gov docket page provides a mechanism for automatic email notification when new filings are made in that docket. I highly recommend using that notification mechanism, including renewing it annually if your complaint remains unresolved after one year. Sometimes DOT or airline staff may forget to (or otherwise fail to) notify you of a new filing.

Formal complaints are governed by DOT rules contained in 14 CFR 302 subpart D. It’s useful to read those rules to learn what to expect.

An airline must respond to your complaint (by filing its “Answer”) within 15 days, unless it requests and receives an extension from DOT. DOT staff usually provide such an extension when requested. Airline representatives will ask you to accept, which you virtually must – in the sense that if you declined, the DOT would probably grant the extra time anyway. It’s also polite to grant the extra time; the benefit of this formal complaint process is its formality and its rigor, not its speed.

There is no guarantee of any particular timing for DOT judgment or resolution. Many complaints have gone more than a year without resolution. After a lengthy wait, you could inquire with DOT staff or contact your federal representatives to seek their assistance. I have not used these methods.

In general, a complainant has no right to respond to an airline’s Answer. If you want to file such a response (a “Reply”), you should seek agreement from the airline to do so (typically followed by a counter-response from the airline, called a “Surreply”). You must then seek DOT permission to reply. This can be an informal email to DOT attorneys, CC’ing the airline representative. You may want to propose a maximum page length, timing, and purpose. You’ll adapt the Complaint Template to file your reply, including replacing the “Complaint” heading with “Reply” (in every location including first page caption, second page caption, first page header, and subsequent page header) and adding the docket number on the first and second pages.

Once you file a formal complaint, you should avoid informal communications with DOT staff on the same subject.

Others have reported that airlines sometimes attempt to “buy off” a complainant privately – provide some money or whatever a complainant is requesting, in exchange for the complainant withdrawing the complaint. If you accept such an offer and withdraw your complaint, there will probably be no further proceedings in the docket, and hence nothing to benefit other passengers with similar problems. On the other hand you’ll get an immediate personal benefit.

I am unable to provide legal assistance to complainants, but I am often able to provide procedural pointers based on my experience in this area. Contact me.

Credits

My sincere thanks to Edward Hasbrouck, whose special knowledge of all things aviation-consumer spurred my interest in this subject. Thanks also to Mike Borsetti, whose knowledge of fare rules helped me understand my rights.

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Formal DOT Complaints – A Guide for Consumers

When something goes wrong in air travel, consumers often need to reach an appropriate resolution with airline staff. But the standard methods are not always sufficient — sometimes ordinary customer relations staff are intransigent or just unresponsive, and a credit card chargeback is a poor fit for disputes that can be surprisingly complex.

In today’s post, I present a dispute resolution channel most consumers do not know about: formal complaints before the US Department of Transportation. The process lives up to the “formal” label, requiring documents formatted in a particular way, submitted through both web upload and email (neither particularly intuitive), with all proceedings posted for public review. But this approach typically goes straight to airline attorneys, and the on-the-record public proceeding helps assure high-quality discussion. In today’s piece, I explore known dispute resolution methods, then give interested consumers a guide to the DOT Formal Complaint process.

My guidance:

How to file and pursue a consumer complaint against an airline – and the DOT “formal complaint” process

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Aviation Consumer Protection – Research and Complaints

Air travelers often trust that airlines will treat them fairly, in accordance with law and regulation. In fact, problems abound. I have gathered my research on aviation consumer protection matters, including findings of impropriety as well as complaints to the US Department of Transportation. I also include selected significant complaints by others. My tabulation:

Aviation Consumer Protection – Research and Complaints

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How Uber Uses API Restrictions to Block Price Comparison and Impede Competition updated June 3, 2016

Popular as Uber may be, it isn’t the only way to summon a car for a ride across town. In most US cities, Lyft is a strong number two. Here in Boston, Fasten touts lower fees to drivers, promising cheaper rides for passengers and greater revenue to drivers. Drivers often run multiple apps, and passengers switch between them too. If these apps competed fiercely, Uber might be forced to lower its fee, reducing or eliminating profit. So what justifies Uber’s lofty $68+ billion valuation?

For years, Uber has tried to use its API as a potential barrier against competition. Uber invites third-party developers to connect to its servers to get real-time information about vehicle location (how many minutes until a vehicle can pick up a passenger at a given location) and the current level of surge pricing. But there’s a catch: To access data through Uber’s API, developers must agree not to include Uber API data in any tool that Uber deems competitive.

Uber encourages app developers and the general public to think this API restriction is Uber’s right—that Uber’s data is for Uber to use or restrict as it chooses. But the restriction is calculated and intended to block competition—a purpose considered improper under competition laws, and a special stretch for Uber in light of the company’s positions on related issues of competition and regulation.

Uber’s API restrictions

Uber’s API Terms of Use explains Uber’s purpose in remarkable simplicity:

Be a strong, trustworthy partner to Uber. Please do not:

Compete with Uber or try to drive traffic away from Uber.

…

Aggregate Uber with competitors.

Uber’s API Terms of Use then instruct:

In general, we reserve the sole right to determine whether or not your use of the Uber API, Uber API Materials, or Uber Data is acceptable, and to revoke Uber API access for any Service that we determine is not providing added benefit to Uber users and/or is not in the best interests of Uber or our users.

The following are some, but not all, restrictions applicable to the use of the Uber API, Uber API Materials, and Uber Data:

…

You may not use the Uber API, Uber API Materials, or Uber Data in any manner that is competitive to Uber or the Uber Services, including, without limitation, in connection with any application, website or other product or service that also includes, features, endorses, or otherwise supports in any way a third party that provides services competitive to Uber’s products and services, as determined in our sole discretion.

Uber’s developer documentation specifically warns:

Using the Uber API to offer price comparisons with competitive third party services is in violation of § II B of the API Terms of Use. Please make sure that you familiarize yourself with the API Terms of Use to avoid losing access to this service.

Assessing Uber’s API restrictions

The most favorable reading of Uber’s API restrictions is that Uber alone controls information about the price and availability of its vehicles. From Uber’s perspective, accessing Uber’s API is a privilege, not a right. Indeed, some might ask why Uber might be expected, let alone required, to assist a company that might send users elsewhere. A simple contract analysis shows no reason why the restriction is improper; if Uber prominently announces these requirements, and developers willingly accept, some would argue that there’s no problem.

A strong counterargument begins not with the contract but with Uber’s purpose. One might ask why Uber seeks to ban comparisons with other vehicle dispatch services. Uber doesn’t ban aggregators and price comparison tools because it believes these tools harm passengers or drivers. On the contrary, Uber bans aggregators and price comparison tools exactly because they help passengers and drivers but, potentially, harm Uber by directing transactions onto other platforms. Uber’s purpose is transparently to impede competition —to make it more difficult for competing services to provide relevant and timely offers to appropriate customers. Were such competitors to gain traction, they would push Uber to increase quality and reduce its fees. But blocking competing services positions Uber to retain and indeed increase its fees.

Consider a competitor’s strategy in attempting to compete with Uber: Attract a reasonable pool of drivers, impose a lower platform fee than Uber, and split the savings between drivers and passengers. If Uber’s current fee is, say, 20%, the new entrant might charge 10%—yielding savings which could be apportioned as a 5% lower fare to passengers and a 5% higher payment to drivers.

Crucially, aggregators help the entrant reach passengers at the time when they are receptive to the offer. Every user at an aggregator is in the market for transportation, not just generally but at that very moment, making them naturally receptive to an entrant’s offer. Furthermore, a user who visits an aggregator has all but confirmed his willingness to try an alternative to Uber. So aggregators are the most promising way for an entrant to reach appropriate users.

At least as important, aggregators help an entrant gain momentum despite a small scale of operations. At the outset, a new entrant wouldn’t have many drivers. So if a consumer installs the entrant’s app and opens it to check vehicle availability, the entrant’s proposed vehicle would often be further away, requiring that passengers accept longer wait times and that drivers accept longer unpaid trips to reach paid work. Notably, an aggregator helps the entrant reach users already close to the available vehicles—providing an efficient way for the entrant to begin service.

In contrast, without aggregators, entrants face inferior options for getting started. They could advertise in banners or on billboards to attract some users. But those general-purpose ad channels tend to reach a broad swath of users, only a portion of whom need Uber-style service, and even fewer of whom are ready to try a new service. Meanwhile, any users found through these channels will tend to have diverse requirements for ride timing and location; there is no way for an entrant to reach only the passengers interested in rides at the times and places where the entrant has available drivers. With a low density of drivers and passengers, the entrant’s passengers will face longer wait times and drivers will face longer unpaid positioning trips. Some users may nonetheless be willing to try the entrant’s service. But they’ll have to open the entrant’s app to check, for each trip, whether its availability and pricing meet expectations—extra steps that impose delay and will quickly come to seem pointless to all but the most dedicated passengers. As a whole, these factors reduce the likelihood of the new service taking off. Indeed, small transport services have famously struggled. Consider, for example, the 2015 cessation of Sidecar.

Uber might have tried to explain away its API restrictions with pretextual purposes such as server load or consumer protection. These arguments would have been difficult: Price comparison requests are not burdensome to Uber’s servers; Uber nowhere limits the quantity of requests for other purposes (e.g. through an API fee or through throttling). Nor is there any genuine contention that price comparison services are, say, confusing to users; the difference between an Uber and a Lyft ride can be easily communicated via an appropriate logo, on-screen messaging, and the like. But in any event Uber hasn’t attempted these arguments; as Uber itself admits in the rules quoted above, the API restrictions are designed solely to advance the company’s business interests by blocking competition.

The relevant legal principles

One doesn’t readily find antitrust cases about APIs or facilitating price comparison. But Uber’s API partners act as de facto distributors—telling the interested public about Uber’s offerings, prices, and availability. A long line of cases takes a dim view of dominant firms imposing exclusivity requirements on their distributors. Areeda and Hovenkamp explain the tactic, and its harm, in their treatise (3d ed. 2011, ¶1802c at 76):

[S]uppose an established manufacturer has long held a dominant position but is starting to lose market share to an aggressive young rival. A set of strategically planned exclusive-dealing contracts may slow the rival’s expansion by requiring it to develop alternative outlets for its product, or rely at least temporarily on inferior or more expensive outlets. Consumer injury results from the delay that the dominant firm imposes on the smaller rival’s growth.

Most recently, the FTC brought suit against McWane, the dominant US pipe fitting supplier, which had controversially required distributors to sell only its products, and not products from competitors, by threatening forfeiture of rebates and perhaps loss of access to any McWane products at all. The FTC found that McWane’s exclusionary distribution policy maintained its monopoly power; the Eleventh Circuit upheld the FTC’s finding; and the Supreme Court declined to hear the case. McWane thus confirms the competition concerns resulting from exclusive contracts from distributors. In relevant respects, the parallels between Uber and McWane are striking: Both companies use contracts to raise rivals’ costs to prevent them from growing into effective competitors. Compared to McWane, Uber’s API restrictions are in notable respects more aggressive. For example, McWane’s first response to a noncompliant distributor was to withhold rebates, and in litigation McWane protested that its practice was not literally exclusive dealing but rather a procompetitive inducement (through rebates yielding lower prices). Putting aside McWane’s failure in these arguments, Uber could make no such claims, as its API restrictions (and threats to UrbanHail, discussed below) exactly implement exclusive dealing, expelling the noncompliant app or site from access to Uber’s API as a penalty for including competitors.

More generally, Uber’s conduct falls within the general sphere of exclusionary conduct which has been amply explored through decades of caselaw and commentary. The Department of Justice’s 2009 guidance on Single-Firm Conduct Under Section 2 of the Sherman Act is broadly on point and usefully surveys relevant doctrines. As the DOJ points out, the essential question for exclusionary conduct cases is whether a given tactic is appropriate, aggressive competition (which competition policy sensibly allows) versus a practice intended to exclude competition (more likely to be prohibited under competition law). After considering several alternatives, the DOJ favorably evaluates a "no-economic-sense test" that asks whether the challenged conduct contributes profits to the firm apart from its exclusionary effects. In Uber’s case, no such profits are apparent. Indeed, the API restrictions require Uber to turn down referrals from apps that violate the API restrictions—foregoing short-term profits in service of the long-term exclusionary purpose.

The DOJ ultimately offers its greatest praise for an "equally efficient competitor test," asking whether the challenged conduct is likely in the circumstances to exclude a competitor that is equally efficient or more efficient. Uber’s restrictions fare poorly under this test. Consider a more efficient competitor—one with, perhaps, lower general and administrative costs that allow it to charge a lower fee on top of payments to drivers. Uber’s restrictions prevent such a competitor from effectively reaching the consumers who would be most receptive to its offer.

Separately, the DOJ notes the promise of conduct-specific tests that disallow specific practices. While the caselaw on APIs, data access, and price comparison is not yet well-developed, one might readily imagine a conduct-specific test in this area. In particular, if a company offers a standardized and low-burden mechanism for consumers, intermediaries, and others to check its prices and availability, the company arguably ought not be able to withhold access to that information for the improper purpose of blocking competition.

Relatedly, the DOJ points out the value of considering the scope of harm from the challenged conduct, impact of false positives and false negatives, and ease of enforcement. Uber’s restrictions fare poorly on these fronts too. Uber would face little burden in being required to provide data about its prices and availability to comparison services; Uber has already built the software interface to provide this data, and the servers are by all indications capacious and reliable. Enforcement would be easy: Require Uber to strike the offending provisions from its API Terms and Conditions. Uber need not create any new software interfaces or APIs in order to comply; only Uber’s lawyers, but not Uber’s developers, would need take action.

Uber might argue that it is one of many transportation services and that the Sherman Act should not apply given Uber’s small position in a large transport market. Indeed, Sherman Act obligations are predicated on market power, but Uber’s size and positioning leave little doubt about the company’s power. As the leading app-based vehicle dispatch service, Uber would certainly be found a dominant firm in such a market. In a broader market for hired transport services, including taxis and sedans, Uber surely still has market power. For example, analysis of expense reports indicates that business travelers use Uber more than taxis.

Experience of transport comparison services and the case of UrbanHail

As early as August 2014, analysts had flagged Uber’s restriction on developers promoting competing apps. Indeed, the subsequent two years have brought few apps or sites that help consumers choose between transportation platforms—some with static data or general guidance, but no widely-used service with up-to-the-minute location-specific data about surges and vehicle availability. Uber’s API restrictions seem to be working in exactly the way the company hoped.

An intriguing counterexample comes from UrbanHail, an app which promises to present "all of your ridesharing and taxi options in one click to help you save time and money [and] frustration." (UrbanHail was created by five Harvard Business School MBA students as their semester project for the required FIELD 3 course. As part of my academic duties as a HBS faculty member, I happen to teach FIELD 3, though I was not assigned these students. I advised them informally and have no official academic, supervisory, or other affiliation with the students or UrbanHail.)

UrbanHail prompted a response from Uber the same day it launched. In a first email, Uber’s Chris Messina (Developer Experience Lead) wrote:

Hey guys, my name is Chris Messina and I run Developer Experience for Uber. Chris Saad [CC’ed] is the PM of the API.

We wanted to congratulate on your recent press as we love seeing folks innovating in the transit space, but wanted to let you know that your use of our API is in violation of section II B of our terms of use.

We’re more than happy for you to continue developing your app, but ask that you remove any features that list Uber’s prices next to our competitors.

Please let us know if you have any questions. Thanks!

Three weeks later, he followed up:

Hey guys,

I haven’t heard back from you, so I wanted to follow up.

Unfortunately, UrbanHail is still violating the agreements you entered with Uber, including not only the API Terms of Use which I mentioned in my previous email, but also Uber’s rider terms (which prohibit scraping or making Uber’s services available for commercial use).

I’d like to highlight that not only are these conditions found in the legal text, but the spirit of our terms are summarized in plain english at the top of that document. Further, a specific warning to not create a price comparison app is provided in-line in the technical reference for the price estimates API.

Thousands of developers around the world use the Uber API to build new, interesting apps. To preserve the integrity of the Uber experience, we require these apps to stay within the guardrails we’ve created, and are set forth in our terms. Despite our efforts to make these terms and policies clear and transparent, you chose to act against them.

All that being said, we very much value the time and energy that developers like you invest in building with the Uber API, and we actively support and encourage them to be creative and innovate with us.

If you build something that complies with our Terms of Use, we would love to reward your effort in a number of ways. Here are just some of the things we can offer:

* A post on our blog featuring your app

* A listing in our showcase

* Affiliate revenue for referring new Uber riders to us

* Access to our "Insiders Program" which offers office hours with the Uber Developer Platform team and exclusive developer events

Please let me know when you’ve taken UrbanHail out of the App Store and removed any related marketing materials so we can start working on a new opportunity together.

Please note, however, if I don’t hear from you by May 31, I’ll be forced to revoke your client ID’s access the Uber API.

Chris

Today, May 31, is Chris’s deadline. I’ll update this post if Chris follows through on the threat to disable UrbanHail’s API access and prevent the app from including Uber in its price comparison.

Update (June 3): UrbanHail reports that Uber terminated its API access, preventing Uber from appearing within Urbanhail’s results page.

Special challenges for Uber in imposing these restrictions

Uber styles itself as a champion of competition. Consider, for example, CEO Travis Kalanick’s remarks to attendees at TechCrunch Disrupt in 2012. His bottom line: "Competition is good." Uber takes similar positions in its widespread disputes with regulators and incumbents transportation providers—styling its offering as important competition that benefits consumers. Against that backdrop, Uber struggles to restrict third-party services that promise to enhance competition.

Indeed, media coverage of Uber’s dispute with UrbanHail has flagged the irony of Uber criticizing competition from other services. The Boston Globe captioned its piece "New app gives Uber a little disruption of its own," opening with "Uber Technologies Inc. built a big business by pushing past regulations that limit competition with taxis. But the tech-industry darling isn’t always happy with smaller companies trying similar tactics." Boston.com was in accord: "Uber rankled by app that compares ride-hailing prices," as was BostInno: "Uber is trying to shut down this Boston price-comparison app."

Twitter users agreed: Henry George: "@Uber Do you find it the least bit ironic that you’re complaining about ride competition with @urbanhail? Don’t try legal BS, innovate!" Michael Nicholas: "The irony of @Uber complaining @urbanhail is ‘breaking the rules’ of api usage is breathtaking." Gustavo Fontana: "@Uber should leave them alone. It’s fair game."

Uber may dispute whether it has the market power necessary to trigger antitrust law and Sherman Act duties. But Uber’s general position on competition is clear. Uber struggles to chart a path that lets it compete with taxis without the permits and inspections required in many jurisdictions—but doesn’t let comparison shopping services compare Uber’s prices with taxis, Lyft, and other alternatives.

Moreover, Uber’s professed allies are equally difficult to reconcile with the company’s API restrictions. For example, Uber this month announced an advisory board including distinguished ex-competition regulators. Consider Neelie Kroes, formerly the European Commission’s Commissioner for Competition who, in that capacity, oversaw the EC’s €497 million sanctions against Microsoft. Having overseen European competition policy and subsequently digital policy for fully a decade, Kroes is unlikely to look favorably on Uber’s efforts to foreclose entry and reduce competition.

Special challenges for Uber’s developer team in imposing these restrictions

A further challenge for Uber is that its key managers—distinguished experts on software architecture—have previously taken positions that are difficult to reconcile with Uber’s efforts to restrict competition.

Best known for creating the hashtag, Chris Messina (Uber’s Developer Experience Lead) boasts a career espousing "openness." In his LinkedIn profile, he notes a prior position as an "Open Web Advocate" and a board member at the "Open Web Foundation." Describing his work at Citizen Agency, he says he "appl[ied] design and open source principles to consulting." Wikipedia disambiguates Messina from others with the same name by calling him an "open source advocate," a phrase repeated in the first sentence of Wikipedia’s article. Wikipedia also notes a 2008 article entitled "So Open It Hurts" about Messina and his then-girlfriend, describing their "public and open relationship." Google reports 1,440 different pages on Messina’s personal site, factoryjoe.com, mentioning the word "open." While the meaning of "open" varies depending on the context, the general premise is a skepticism towards restrictions and limitations—be they requirements to pay for software, limits on how software is used, or, here, restrictions on how data and APIs are used. It’s a world view not easily reconciled with Uber’s restriction on price comparisons.

Chris Saad (Uber’s API Product Manager) has been similarly skeptical of restrictions on data. His LinkedIn page notes that he co-founded the DataPortability Project which he says "coined and popularized the phrase "data portability"; and led "an explosion of conversation[s] about open standards and interoperability." That’s a distinguished background—but here, too, not easily reconciled with Uber’s API restrictions.

It’s no coincidence that Uber’s developer team favors openness. Openness is the natural approach as a company seeks to connect to external developers. But in limiting how other companies use data, Uber violates key tenets of openness, restricting the flow and use of data that partners and consumers reasonably expect to access.

Looking ahead

Uber faces a looming battle to retain its early lead in smartphone-based vehicle dispatch. But as the dominant firm in this sector—with the largest market share and, to be sure, a category-defining name and concept—Uber is rightly subject to restrictions on its methods of competition. Cloaking itself in the aura of competition as it seeks to avoid regulations that apply to other commercial vehicles, Uber is poorly positioned to simultaneously oppose competition from other app-based services.

Uber is not alone in limiting the ways users can access data. In 2008, I flagged Google’s AdWords API restrictions, which impeded advertisers’ efforts to use other ad platforms as well as Google. Google defended the restrictions, but competition regulators agreed with me: Even as the FTC declined to pursue other aspects of early competition claims against Google, FTC pressure compelled Google to withdraw the API restrictions in January 2013. In Europe, these same restrictions were among the EC’s initial objections to Google’s conduct. Google has yet to resolve this dispute in Europe, and may yet face a fine for this conduct (in addition to substantial fines for other challenged practices). Uber’s API restrictions risk similar sanctions—perhaps even more quickly given Uber’s many regulatory proceedings.

What comes next? If Uber follows through on its threat to UrbanHail, as Messina said it soon would, there will again be no app or site to compare prices and availability across Uber and competitors. Uber won’t need to go to court to block UrbanHail; it can simply withdraw the security credentials that let UrbanHail access the Uber API. From what I know of UrbanHail’s size and stature, it’s hard to imagine UrbanHail filing suit; that would probably require resources beyond UrbanHail’s current means.

Nonetheless, Uber is importantly vulnerable. For example, transport is highly regulated, and Uber needs regulatory approval in most jurisdictions where it operates. This approval presents a natural and easy way for policy makers to unlock Uber’s API restrictions: As a condition of participation in a city’s transit markets—using the public roads among other resources—Uber should be required to remove the offending API restrictions, letting aggregators use this information as they see fit. Once one city establishes this requirement, dozens more would likely follow, and Uber’s API restrictions could disappear as suddenly as they arrived.

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Uber Overcharges, Spring 2016

While claiming price advantages over taxis, Uber overcharges consumers by withholding promised discounts and credits. In today’s post, I examine a set of Uber pricing guffaws — each, a breach of the company’s own unambiguous written commitments — that have overcharged consumers for months on end. Taken together, these practices call into question Uber’s treatment of consumers, the company’s legal and compliance processes, and its approach to customer service and dispute resolution.

A "free ride" or a $15 discount?

Uber offers 'free rides' when users refer friends. Uber offers "free rides" when users refer friends.

Uber specifically confirms that the friend's 'first ride' is free, while the existing user gets 'a free ride (up to $15).'Uber specifically confirms that the friend’s "first ride" is free, while the existing user gets "a free ride (up to $15)."

Uber asks existing users to refer friends — promising significant sign up bonuses to both new and existing users for each referral. First, the existing user activates the Free Rides function in the Uber app, revealing the offer and a code that the new user must enter so Uber can track the referral. Quoting from the first screenshot at right (emphasis added):

Share your invite code [placeholder]. Send friends free rides and you’ll get one too, worth $15! Details. INVITE FRIENDS.

A user who taps "Details" sees two additional sentences (quoting from the second screenshot at right):

Share your promo code with friends and they’ll get their first ride free. Once they’ve tried Uber, you’ll automatically get a free ride (up to $15) the next time you use Uber. CLOSE.

Neither screen provides any menu, link, button, or other command offering more details about other requirements or conditions. The text quoted above is the entirety of Uber’s offer.

Uber’s promise is clear — a "first ride free" for the new user, and a "free ride (up to $15)" for the existing user. But Uber’s actual practice is quite different. Most notably, the new user’s "free ride" is also limited to a $15 discount. One might ask whether the "worth $15" in the first screen applies to the friend’s free ride or to the existing user’s free ride or perhaps both. But the Details screen leaves no doubt that this limitation applies only to the existing user. Notice the placement of the "up to $15" parenthetical only in the sentence describing the existing user’s free ride. In contrast, the separate sentence about the new user’s ride promises "their first ride free" with no indication of any maximum value.

These discrepancies create unfortunate surprises for typical Uber customers. Consider the standard workflow. An existing Uber user tells a friend about Uber and, in person, helps the new user install the app and create an account, including entering the existing user’s referral code when prompted. "You’ll get a free ride," the existing user explains, guided by Uber’s simple on-screen offer. The new user then takes an expensive ride; expecting the ride to be free (as promised), the new user might choose Uber for a distance that would otherwise have been a better fit for a train or bus, or the new user might accept a high surge multiplier. Only later does the new user learn that according to Uber, "free" actually meant a $15 discount. The user would have no written evidence of Uber’s "free ride" promise, which was conveyed orally by the existing user. So the new user is unlikely to complain — and my experience (detailed below) indicates that a request to Uber is unlikely to get satisfaction.

I know about these problems because of an experience referring a friend — call her my cousin — in January 2016. I told her she’d get a free ride, but her receipt showed no such benefit. In fact she took her first ride in another country, which prompted me to check for other discrepancies between Uber’s marketing statements and its actual practice.

Piecing together statements from Uber’s support staff and the various disclosures in Uber’s Android, iOS, and mobile web apps, I found five separate restrictions that were not mentioned mentioned anywhere in Uber’s new user offer as presented to existing Android users:

  • The new user’s credit only applies to a ride in the country that Uber designates as the new user’s home country or the currency that Uber designates as the new user’s home currency. But Uber’s signup page doesn’t ask about a user’s home country or currency. As best I can tell, Uber automatically sets a user’s home country based on the user’s IP address or location at the time of signup. (Source: Uber staff indicated that "the promo is currency specific" in explaining why my cousin received no discount on her first ride.)
  • The existing user’s credit can only be redeemed towards a ride in the country that Uber designates as the existing user’s home country. (Source: Uber’s iOS app, GET FREE RIDES offer, secondary disclosure screen, stating that "discounts apply automatically in your country," emphasis added.)
  • The new user’s maximum ride value varies by country. Not only is there a maximum value (contrary to the simple "first ride free" in Uber’s second screen above), but the maximum value is not mentioned to the existing user. (Source: Uber’s iOS app, GET FREE RIDES offer, secondary disclosure screen; and mobile web, new user offer, page footer.)
  • All discounts expire three months from issue date. (Source: Uber’s iOS app, GET FREE RIDES offer, secondary disclosure screen.)
  • Offer is not valid for UberTaxi. (Source: Uber’s iOS app, GET FREE RIDES offer, secondary disclosure screen; and mobile web, GET FREE RIDES offer, page footer.)

The table below presents the Uber’s marketing offers in all three platforms, along with the errors I see in each:

  Android iOS Mobile Web
Primary disclosure FREE RIDES. Share your invite code [placeholder]. Send friends free rides and you’ll get one too, worth $15! Details. INVITE FRIENDS. GET FREE RIDES. They get a free ride and you will too (worth up to $15), after their first ride. Details. GET FREE RIDES. Sign up now to claim your free gift from [placeholder] ($15 off first ride)*.
Secondary disclosure Share your promo code with friends and they’ll get their first ride free. Once they’ve tried Uber, you’ll automatically get a free ride (up to $15) the next time you use Uber. CLOSE.

Every time a new Uber user signs up with your invite code, they’ll get their first ride free (value amounts vary by location).

Once they take their first ride, you’ll automatically get your next ride free (worth up to $15).

Discounts apply automatically in your country and expire 3 months from their issue date. Offer not valid for uberTAXI.

Every time a friend signs up with your invite code, they’ll get their first ride free (value amounts vary by country). Once they use it, you’ll automatically get a free ride to use the next time you Uber (worth up to $15). Offer not valid for UberTaxi.
Errors

New user’s ride is actually limited to $15 (or other amounts in other countries). In contrast, both disclosures indicate that there is no limit to the value of the new user’s ride.

Discount only applies to a new user’s first ride in the user’s home country as determined by Uber.

Existing user’s discount can only be redeemed in existing user’s home country.

Discounts for both the new and existing user expire three months from issue date.

Offer is not valid for UberTaxi.

Secondary disclosure plausibly contradicts primary disclosure: Primary disclosure promised "a free ride" for the new user, while secondary disclosure retracts "free ride" and instead offers only a discount. In contrast, FTC rules allow secondary disclosures only to clarify, not to contradict prior statements.

Discount only applies to a new user’s first ride in the user’s home country as determined by Uber.

Discount only applies to a new user’s first ride in the user’s home country as determined by Uber.

Existing user’s discount can only be redeemed in existing user’s home country.

Discounts for both the new and existing user expire three months from issue date.

I first alerted Uber staff to these discrepancies in January 2016. It was a difficult discussion: My inquiries were bounced among four different support representatives, with a different person replying every time and no one addressing the substance of my messages. So I reluctantly gave up.

Six weeks later, a different Uber rep replied out of the blue. He seemed to better understand the problem, and I managed to get two separate replies from him. At my request, he committed to "pass this along to the appropriate team." That said, he did not respond to my repeated suggestion that Uber needed to refund affected consumers.

Eight weeks after my final correspondence with the fifth Uber representative and sixteen weeks after I first alerted Uber to the problem, I see no improvement. Uber’s Android app still makes the same incorrect statements about promotion benefits, verbatim identical to what I observed in January.

Credit on your "next trip" — or later, or not at all

Uber claimed I'd get a 'credit' on my 'next trip.' Uber claimed I’d get a "credit" on my "next trip." In fact, the credit seems to apply only to a future trip in the same country where the problem occurred.

In a variety of circumstances, Uber responds to customer complaints by issuing credits towards a customer’s "next trip." For example, during a recent attempt to ride with Uber in Mexico, I was unable to find or contact the driver. (I was where the on-screen pushpin told me to be, and GPS seemingly told the driver he was where he was supposed to be, but we just couldn’t find each other.) I later received an email receipt showing that I had been charged a cancellation fee. In Uber’s "Help" area, I used Uber’s "I was charged a cancellation fee" feature, and I was immediately advised (emphasis added):

We’ve credited your Uber account. Thanks for letting us know what happened. A credit has been added to your Uber account. This credit will apply to your next trip.

Imagine my surprise when, upon returning to the US a few hours later, I took another Uber ride but received no such credit.

It seems Uber’s notion of credits is in fact country-specific or currency-specific. My problem resulted from difficulty finding a driver in Mexico, where I don’t live and rarely travel. Far from applying the credit on my "next trip," it seems Uber’s systems will carry the credit forward to my next journey in Mexico. (See Uber’s Payment screen, "Credit Balances" section, showing the amount of the cancellation fee as a credit in the currency associated with the country where that fee was charged.) But this is much less useful to users traveling internationally. For example, Uber might impose a time limit on the credit — analogous to Uber’s undisclosed three month limit for use of a "free ride" credit (as revealed in the preceding section). And some users may never return to (or never again take Uber rides in) certain countries or currencies. The plain language of "your next trip" of course purports to protect users against all these contingencies; "your next trip" means a trip denominated in any currency, perhaps soon but perhaps indefinitely in the future. Uber’s actual practice is plainly less favorable to consumers.

Here too, predictable consumer responses increase the harm from Uber’s approach. If a consumer was charged improperly and felt Uber’s response was out of line, the consumer might pursue a credit card chargeback. But when Uber tells the consumer "We’ve credited your Uber account" and "This credit will apply to your next trip," there’s every reason to think the problem is completely fixed. Then the consumer may forget about the problem; certainly the consumer is less likely to diligently check future Uber receipts for a credit that was slated to be automatic and guaranteed. In addition, consumers are vulnerable to the passing of time: If a consumer rides with Uber only occasionally, the permissible time for a chargeback may have elapsed by the time the consumer’s next ride.

Update (May 25, 2016): Four weeks after I reported this discrepancy to Uber, I received a reply from an Uber representative. He confirmed that I did not receive the promised credit for the general reason I described above — a credit provided in one currency, while my next trips was in a different currency. I reminded him that Uber’s statements to users say nothing of any such restriction. I also pointed out that Uber is capable of converting currencies, and I encouraged him to assure that other users, similarly situated, are appropriately refunded. So far as I know, Uber has not done so.

Others’ reports

Checking with friends and colleagues, and receiving further reports from strangers, I’ve learned about a fair number of other Uber billing errata. For example, one user confidently reported that when a driver cancels a ride — perhaps seeing a surge in another app, getting lost, learning that the passenger’s destination is inconvenient, or just changing his or her mind — Uber still charges the passenger a cancellation fee. I haven’t been able to verify this, as I don’t have an easy way to cause a driver to cancel. But in the Uber help tool, the "I was charged a cancellation fee" menu offers as one of its preset reasons for complaint "My driver cancelled" — confirming that Uber’s systems charge cancellation fees to passengers when drivers cancel. Of course Uber’s systems can distinguish who pressed the cancel button, plus Uber could ask a driver the reason for cancellation. I see no proper reason for Uber ever to charge a passenger a cancelation fee if it is the driver who elected to cancel.

Users with experience with this problem, or other Uber contracting or billing errata, should feel free to contact me. I’ll add their experiences here or in a follow-up.

Update (June 4): Readers alerted me to UberPool drivers repeatedly charging for two passengers purportedly riding, when only one passenger was actually present, increasing the charge to passengers.

Update (June 4): In federal litigation against Uber, blind passenger Tiffany Jolliff reports that not only did multiple Uber drivers refuse to transport her and her service dog, but Uber charged her a cancellation fee each time a driver refused to transport her.

Lessons from Uber’s billing errors

I see four distinct takeaways from these billing errors. First, Uber’s engineering, testing, and legal teams need to sharpen their focus on billing, promotions, and credits. The coding of a promotional offer is inextricably linked to the marketing text that describes the offer. Similarly, the coding of a customer service benefit must match the text that explains the benefit to users. Both should be checked by attorneys who specialize in advertising law and consumer protection. Instead, in the problems I described here, Uber’s billing logic seems to be entirely separate from the text presented to consumers. It is particularly striking to see Uber’s three separate textual descriptions of the new user promotion — all three of them incorrect, yet in three different ways. Even a basic attorney review would have flagged the discrepancies and identified the need to inquire further. An advanced attorney review, fully attuned to FTC disclosure rules, might also question what appears in the primary disclosure versus the secondary disclosure. Attorneys might reasonably caution Uber against repeatedly and prominently promising "FREE RIDES" when the company’s actual offer is a discount.

Second, Uber’s overcharging is both large and long-lasting. I reported the new user promotion problems in January 2016, although they probably began considerably earlier. (Perhaps Uber will respond to this article by determining, and telling the public, when the problems began.) In response to this article, I expect that Uber will fix these specific problems promptly. But given Uber’s massive operations — many thousands of new users per month — the aggregate harm is plausibly well into the millions of dollars.

Third, my experience calls into question whether Uber’s customer service staff are up to the task of investigating or resolving these problems. Writing in to customer service is fruitless; even with screenshots proving the discrepancy in the new user promotion, Uber was slow to promise a refund to match the marketing commitment. (It took five separate messages over eight weeks!) In fact, even after promising the refund in a message of March 16, 2016, that refund never actually occurred. Similarly, I promptly alerted Uber to the "next ride" credit not provided — but ten days later, I have received neither the promised credit nor any reply. Others have reported the shortfalls of Uber’s customer service staff including ineffective responses, a focus on response speed rather than correctness, and insufficient training. My experience suggests that these problems are genuine and ongoing. Users with the most complicated problems — Uber system flaws, discrepancies between records, billing errors — appear to be particularly unlikely to achieve resolution.

Finally, users lack meaningful recourse in responding to Uber’s overcharges. In each of the problems I found, Uber is overcharging a modest amount to each of many thousands of customers. Ordinarily, this would be a natural context for class action litigation, which would allow a single judge and a single set of lawyers to figure out what happened and how to set things right. But Uber’s Terms and Conditions purport to disallow users to sue Uber at all, instead requiring arbitration. Furthermore, Uber claims to disallow group arbitration, instead requiring that each consumer bring a separate claim. That’s inefficient and uneconomical. Uber’s arbitration clause thus provides a de facto free pass against litigation and legal remedies. Of course many companies use arbitration to similarly immunize themselves against consumer claims. But Uber’s controversial activities, including the overbilling described here among many other disputes, give consumers extra reason to seek judicial oversight.

Next steps

Just last week, Uber formed a paid advisory board of ex-regulators, most with competition and consumer protection expertise. These experts should exercise independent judgment in looking into the full breadth of Uber’s problems. I doubt overbilling was previously on their agenda, but my experience suggests it should be. To investigate, they might review all customer service threads with five or more messages, plus look for all messages attaching screenshots or mentioning "overcharge" or "promised" or "contract." Tthey shouldn’t rely merely on Uber staff summaries of customer experience; with an advisory board of superstars, the group should bring independent judgment to assessing and improving the company’s approach.

Meanwhile, Uber’s response should include a full refund to each and every user who was overcharged. For example, when Uber promised a "free ride" to an Android user who in turn referred a friend, Uber should provide the friend with a refund to achieve exactly that — not just the $15 discount that may be what Uber intended but isn’t what the offer actually said. Since Uber may be disinclined to offer these refunds voluntarily, I’m alerting consumer protection and transportation regulators in appropriate jurisdictions to help push to get users what they were promised.