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Uber Settles Class Action Claim of Stealing Driver Tips

By George Khoury, Esq. | Last updated on

Last week, a class action settlement between Uber and the company's riders was approved by the federal district court in San Francisco. The ride share company was facing class action claims for deceiving riders about tipping drivers. The settlement refunds to riders all tip monies purportedly wrongly taken by the company.

Angry Uber Riders

The class action case was filed in January 2014 by one Uber rider that asserted that she would not have used the service if she knew that 100 percent of the 20 percent gratuity added to fares would not be given to the drivers. It was alleged that Uber sent an email to riders that specifically stated that the 20 percent gratuity added to their fares would go directly to the drivers.

From April 2012 to March 2013, Uber is alleged to have taken 40 percent of this 20 percent gratuity. Strangely though, rather than forcing Uber to pay the withheld gratuities to the drivers that they were intended for, under this settlement, the 45,000+ riders will be refunded the amounts withheld by Uber. Excluded from the settlement were Uber users who may have seen the statement regarding the gratuity online, but did not receive the e-mail.

Grabbing Gratuitous Gratuities

As part of the settlement, riders that paid the gratuity during the relevant time period will receive 100 percent of the portion of the payment back that Uber kept. Riders that did not submit their addresses to have the monies returned in check form after receiving the class action settlement notices, will have their Uber accounts credited with the amounts withheld, if they still have an active account.

According to the Order approving settlement, not only will Uber have to pay over $300,000 to the users that were tricked into believing the gratuities were solely for the drivers, but Uber will also have to pay for the class action attorneys' fees separately. After reviewing and approving the settlement, the court awarded the plaintiffs' attorney over $400,000 as well. In addition to the class relief and attorneys' fees, Uber was also ordered to pay the lead plaintiff an additional $5,000 as an incentive reward for having taken the time to serve as lead plaintiff.

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