Uber agrees to settlement of up to $25 million in misleading-advertising suit

A passenger loads his suitcase into his UberX ride at Los Angeles International Airport.

A passenger loads his suitcase into his UberX ride at Los Angeles International Airport.

(Al Seib / Los Angeles Times)

Uber agreed to a $25-million settlement in a lawsuit alleging the ride-hailing company misled and overcharged customers in Los Angeles and San Francisco.

Los Angeles County Dist. Atty. Jackie Lacey and San Francisco Dist. Atty. George Gascon filed the consumer protection lawsuit against Uber in 2014, accusing the company of overstating its customer-safety policy in marketing materials and adding unnecessary fees for tolls and airport drop-offs.

Uber will split the payment evenly between the counties. So long as Uber hands over $10 million within 60 days and adheres to other parts of the settlement for two years, the company will be spared the remaining $15 million.

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Uber has already addressed many of the claims in other lawsuit settlements, such as agreeing to no longer use phrases such as “safest ride on the road” and describing its background checks as “the gold standard.”

The relatively small settlement is something of a coup for the transportation giant, which has made a habit of sweeping into cities, ignoring existing regulation and forcing lawmakers to play catch-up.

“We’re glad to put this case behind us and excited to redouble our efforts serving riders and drivers across the state of California,” a spokeswoman said in a prepared statement. The district attorneys alleged that Uber advertised having an “industry-leading background check process,” but because it does not fingerprint its drivers, its criminal checks were “completely worthless,” Gascon said at the time.

“The company repeats this misleading statement, giving consumers a false sense of security when deciding whether to get into a stranger’s car,” he said.

The lawsuit had no immediate effect on Uber, as the ride-hailing company was able to continue its operations as normal -- in the process increasing its valuation from $40 billion in late 2014 to $62.5 billion today.

In the year since the lawsuit, customers filed two class-action suits alleging the San Francisco company misled them by advertising its rides were “safer than a taxi” and its background checks were “industry leading.”

The company settled both lawsuits in February this year for $28.5 million and agreed to change the language of its safety-related advertising and stop using the term “Safe Ride Fee.”

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As part of Uber’s settlement on Thursday, the company said it would work with airports to get authorization before it begins operation, and continue working with the California Division of Measurement Standards to ensure its fares are accurately calculated.

Thursday’s settlement concludes a suit that does not represent Uber’s biggest legal challenge.

The company still faces a class-action suit filed by drivers who want to be treated as employees rather than independent contractors.

Earlier this week, Uber won permission to appeal whether the case should proceed as a class action involving nearly 160,000 drivers in California.


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