If you’ve used Lyft’s rideshare service, you probably can help but have noticed a $1.50 “Trust and Safety Fee” charge for each ride provided by Lyft drivers. (Note: its competitor Uber recently increased its flat fee to as much as $2.50 in some cities). This fee is added to the fares charged by Lyft & Uber, no matter the distance traveled by your driver. So exactly what is Lyft’s $1.50 being used for and why is it 50% more than the one charged by its competitor? We looked into that question and concluded Lyft’s added charge may be unlawful, unfair and violative of a consent decree entered into by Lyft with California law enforcement. There’s a very strong likelihood that this “Trust & Safety” fee is being used to pad Lyft’s profits rather than being used for “trust” or “safety”.
Lyft has publicly estimated that it will generate over 90 million rides in 2015. If true, this fee would net the company over $130 million in additional revenues. Lyft claims in its website that the fee covers insurance, background and DMV checks, to every consumer. It charges these fees in a highly regressive manner rather than based on the miles to be driven or the amount of the fare, such that the persons with the shortest ride pay the highest amount on a percentage basis.
So we asked Lyft to prove that the $130 million that it was estimated to generate in 2015 is actually be used for the purposes it claims. Its response: “if you don’t like the fee, take us to arbitration”. We did one better — we filed a suit in California civil court to compel Lyft to justify its Trust & Safety fee.
Over the last decade, a number of large companies began adding separate mandatory fees to their services. They’ve been used, most notoriously, by phone, car rental and airline companies to mask the true price they were charging to customers. These fees make it more difficult for consumers to comparison shop, as the price of the service can be made to look artificially low. When Lyft started using the same tactic, we became suspicious.
On Lyft’s website, it uses phrases describing itself as “pioneers in transportation”, “our first of its kind insurance plan”, “we designed safety into every part”. Lyft uses these themes to justify charging a $1.50 per ride “Trust and Safety Fee”. But it has steadfastly declined to show how much it actually pays for insurance, background checks and the like. We do know that Lyft does not appear to use the California Department of Justice’s Live Scan or other more expensive measures but rather simply checks undisclosed national and county data bases. Rather than being an industry leader on of Lyft” and “trust and safety are our top priorities and are at the core of everything we do”, Lyft is simply following what the California Public Utilities Commission has stated they must do rather than providing any heightened processes. As of December 2014, Lyft represented its background check process screens out drivers with histories of violent crimes and other offenses and compared its process to that performed on taxicab drivers, when in fact either it was not the case or it did not disclose the inherent limitations in its background check process. While Lyft agreed to pay a $500,000 penalty and injunctive relief in December 2014 in People v. Lyft, Inc. S.F. Sup. Ct. Case No. CGC-14-543113, it paid no restitution or damages to consumers.
Stay tuned, as we use the legal process to get to the truth about whether Lyft’s charge is violating its customers’ trust…..and safety. Another party has sued Uber to justify its recently increased “Safe Rides” fees and we will be monitoring that case as well.