LOS ANGELES (AP) – The growth of ride-hailing companies such as Uber and Lyft so far has not been hindered by limits from government regulators and campaigns by taxi cab competitors. A bigger threat to the new industry’s impressive start could come from customers – if enough people stop using the services over fears that drivers aren’t safe.
Not safe as in the drivers won’t get into an accident – safe as in they won’t attack passengers.
Uber operates in more than 250 cities in 50 countries, and recently was valued at $40 billion based on $1.2 billion that investors poured into the company in its latest funding round. Lyft, meanwhile, operates in 70 markets in the US, up from 30 at the start of the year.
So far, controversies have not seemed impact the popularity of ride-hailing apps. They boast several advantages over taxis, including no-cash payments and an app that shows how far away a car is and whether the driver received positive reviews from prior riders. Uber ranks 39th in the Apple iTunes store among the most popular free apps, ahead of Gmail and the music streaming service Pandora. Lyft, which is much smaller, is not in the top 100. But just this week, California prosecutors sued both, saying they misrepresent and exaggerate the rigor of their background checks. Police in India questioned an Uber executive about its background checks after a driver was accused of raping a passenger. And Uber removed a driver in Chicago after a customer reported she was sexually assaulted during a ride in the city last month. The company said it is cooperating with police in what it called “an appalling and unacceptable incident.”
This week’s incidents follow scattered anecdotes of previous assaults by Uber drivers. They don’t prove the services are unsafe alternatives to traditional taxis. But they do present a challenge if riders begin to think they reflect a systemic disregard for passenger safety.
Jeff Brewer, pastor at a church in the Chicago suburbs, wouldn’t step into an Uber car. Though he likes the convenience Uber would bring, he sticks with taxis on trips into the city.
“Whether it’s right or wrong, there’s at least some sort of perception that there’s a company that has vetted the person,” he said. As with airlines, if passenger safety becomes an ongoing issue with Uber rather than isolated incidents, it could face long-term consequences, said Alex Stanton, a crisis management and communications specialist. “At some level, there is a point at which safety does trump convenience,” Stanton said.
The safety and regulatory issues “absolutely” affect Uber’s valuation, said Sam Hamadeh, CEO of research firm PrivCo. Unlike, say Twitter and WhatsApp, Uber is not a “nice, clean technology company, the type that venture capitalists in Silicon Valley usually invest in – which is software, Web apps” and so on, he said.
“Here you are talking about actually, physically having to transport people,” he said. “Uber’s work isn’t done once the taxi is hailed on their app. That’s when all the problems begin.” On its website, Uber says its drivers are “screened through a rigorous process we’ve developed using constantly improving standards.”
In a written statement, Uber added that it screens would-be drivers against “federal, multi-state and county criminal background checks spanning the past seven years.”