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Uber nears settlement after pocketing half of drivers' tips

Uber nears settlement after pocketing half of drivers' tips
The logo of the ride-sharing service Uber in front of its headquarters in San Francisco. (Justin Sullivan / Getty Images)

Uber Technologies Inc. got the green light on Thursday to settle claims it pocketed about half of a 20% “gratuity” charge that passengers thought they were paying to drivers.

U.S. District Judge Edward Chen in San Francisco, who is also presiding over a separate lawsuit against Uber concerning the classification of drivers, granted preliminary approval of a settlement in which Uber will create a fund of $343,861.46 to pay 46,882 customers who used the app over a one-year period.

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Payment will be limited to customers who received a promotional email between April 20, 2012 to March 25, 2013 advertising that 20% of a ride's fare was for gratuity. Uber drivers won't receive any additional payment through the settlement.

Each affected passenger will receive an amount equal to 40% of the gratuity charge, which is "essentially a full refund," the plaintiff attorney said in court documents.

Uber customers who qualify for the class-action settlement will soon receive an email at the address affiliated with their Uber account, at which point they can accept the payment or object to it. Those who wish to take part can provide the settlement administrator with an address to receive a check in the mail, or have the amount credited to their Uber account.

Plaintiff Caren Ehret filed the lawsuit against Uber in 2014, alleging that Uber kept 40% to 50% of the tips. Unlike its competitor, Lyft, Uber does not offer an in-app tipping function. While the company previously discouraged drivers from accepting cash tips from customers, it recently relented as part of a proposed settlement in a separate lawsuit, allowing drivers to solicit cash tips from passengers.

Uber did not immediately respond to a request for comment.

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