Uber loses licence to operate in London
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Uber has been stripped of its London licence for a second time after the UK capital’s transport regulator again found that the car-booking service was not a “fit and proper” company to operate there.
Transport for London on Monday accused Uber of a “pattern of failures” and several regulatory breaches that had put “passenger safety and security at risk”.
In one example cited by TfL, a driver had continued to use the Uber app despite his private hire licence being revoked after he had been cautioned for distributing indecent images of children.
Uber called the decision “extraordinary and wrong” but did not deny TfL’s accusations. It said it planned to appeal and would “continue to operate as normal” in the meantime.
However, it conceded that the technical glitches that allowed driver fraud in London, which occurred after a configuration change in late 2018, might also have caused problems in other cities.
“Fraudsters’ schemes are ever-evolving, which is why Uber is committed to constantly updating and strengthening our processes to protect against them,” said Jamie Heywood, who runs Uber’s business in the UK and Northern Europe. “With regard to the specific issue in London, we have since implemented a series of technical and operational fixes, which have been changed globally.”
Uber has 3.5m regular passengers and 45,000 licensed drivers in London, who take millions of trips there every week.
From late 2018 until May 2019, TfL said more than 14,000 Uber rides were carried out by at least 43 drivers who exploited a loophole in Uber’s systems that allowed them to upload their photos to another driver’s account.
TfL only became aware of the most recent example of the identity fraud earlier this month. After an independent review by Cognizant, a tech consultancy, TfL said it lacked confidence in Uber’s ability to prevent a repeat of the problem.
TfL also found that a number of drivers who had been dismissed or suspended by Uber were able to work using new accounts. The agency said it was a “concern that Uber’s systems seem to have been comparatively easily manipulated”, adding that similar issues had not been identified at other private hire services operating in London.
“While we recognise Uber has made improvements, it is unacceptable that Uber has allowed passengers to get into minicabs with drivers who are potentially unlicensed and uninsured,” said Helen Chapman, director of licensing, regulation and charging at TfL.
Uber versus London
June 21 2017
Uber co-founder Travis Kalanick departs after series of scandals.
August 30 2017
Dara Khosrowshahi, former Expedia chief, appointed Uber CEO.
Sept 22 2017
Transport for London concludes Uber is not “fit and proper” to operate.
October 2 2017
Uber’s UK general manager Jo Bertram quits.
June 26 2018
London magistrate approves new 15-month permit after Uber’s appeal.
Sept 24 2019
TfL grants Uber a limited two-month licence, seeking “additional information”.
Sadiq Khan, Mayor of London, said: “Keeping Londoners safe is my absolute number-one priority, and TfL have identified a pattern of failure by Uber that has directly put passengers’ safety at risk.”
Under London’s private-hire licensing laws, Uber has 21 days to lodge an appeal with a magistrate and can continue to operate throughout the process.
The San Francisco-based company insisted it has “robust systems and checks in place to confirm the identity of drivers”, including conducting an audit of every London driver in the last two months, and planned to introduce a new “facial matching process” soon.
Dara Khosrowshahi, Uber’s chief executive, said in a tweet that Uber had worked hard to change its approach in London:
Mr Khosrowshahi has previously promised to “do the right thing — period”. Uber’s shares were down by more than 5 per cent in pre-market trading in New York.
A series of scandals in 2017 led to TfL denying Uber’s London licence, a ruling that was later overturned in court. Two months ago, Uber was granted an unexpectedly short operating permit that will expire just before midnight on Monday. TfL only discovered the extent of the unauthorised rides late in the renewal process, it said on Monday, alongside other insurance-related issues.
But the Licensed Taxi Drivers’ Association, which represents black cab drivers, celebrated TfL’s decision, saying: “Londoners will be safer as a result.”
Key questions about Uber’s licence woes
How did the driver identity fraud occur?
Uber blames a technical bug for drivers being able to change their photos. Pairs of drivers would collude to swap photos to boost their earnings, likely taking advantage of Uber’s bonuses for hours driven or trips completed in a given time period. It would also have allowed some drivers to avoid waiting months and paying hundreds of pounds for their own private hire licence from TfL.
A configuration change in late 2018 exposed the photo-swap vulnerability and it was exploited until Uber spotted the problem in May, when TfL was notified. Uber says the problem was fixed soon after but it was not until late October, following an audit of all its London drivers, that the last individual to exploit the loophole was identified and taken off Uber’s platform.
How can it be prevented in future?
Uber’s audit, completed in October, checked each of its more than 45,000 licensed drivers’ photos matched the one on their identity documents. Any drivers who want to change their profile picture now have to go to an Uber “hub” and have their photo taken with a specific kind of camera, which is watermarked.
That approach, however, is hard to implement across millions of drivers around the world. In certain countries, including the US, Uber has been using facial-recognition technology to try to prevent fraud by matching randomly selected drivers’ “selfies” to the Uber database since 2016. It said in September it would improve this “Real-Time ID Check” by telling the driver to perform movements such as blinking or smiling.
“Our fraud detection teams use both manual reviews and automated machine learning systems, which analyse more than 600 different signals to look for fraudulent behaviour,” Uber said on Monday.
But Real-Time ID Check has not yet been implemented in the UK, in part because of European privacy rules. Uber said it plans to introduce a new “facial matching process” in London, adapted from the US version to comply with the General Data Protection Regulation.
Could this kind of driver fraud be a problem for Uber outside London?
Uber said the “technical and operational” fixes it applied in London have also been “changed globally”, which suggests the loophole may have been exploited elsewhere.
There are few cities where Uber is under such strict regulatory scrutiny as London, where it must comply with twice as many rules as other car-booking services in the city.
At the heart of TfL’s refusal to grant Uber a permit is that it has been a repeat offender. It took Uber almost a year to identify and finally resolve the problem in London. TfL said it “does not have confidence that similar issues will not reoccur in the future” — an assessment some observers say could apply in any other city.
“Uber do not have the controls necessary to run a widescale transport service and assure passengers and authorities of adequate safety standards,” said Professor John Colley, associate dean of Warwick Business School.
Are Uber’s London competitors any safer?
Kapten, a French car-booking service backed by Daimler and BMW, has signed up almost 20,000 drivers in London since launching there earlier this year. It said it verifies every driver face to face, photographing them and then preventing further changes.
Bolt, another European competitor, said it “manually” verifies drivers’ identities to ensure they match the driving licence. Drivers are not allowed to change their photo without going through the same manual check again.
Both companies said they put drivers through background checks before they are allowed on to the platform.
Are other Uber services affected by TfL’s refusal to grant a licence?
No — Uber Eats, its food delivery business, and Jump, its electric bike rentals service, will still be available even if Uber loses its private vehicle hire licence.
Letter in response to this article:
Uber is my London lifeline / From David Potter, London, UK
Comments