Spaced City

Are Houston Regs Hurting Uber? Hard to Say, Since Uber Sued to Keep City Records Hidden

Uber says Houston’s rules for drivers, among the strictest in the country, make it too hard for qualified people to drive for the company. On Wednesday, Uber general manager Sarfraz Meridia sent Mayor Sylvester Turner and City Council members an ultimatum: Either change the rules, in particular one that subjects drivers to a fingerprint-based background check, or “we will have to cease operations just as other ridesharing platforms previously did.” Attached was a three-page report from Uber claiming it can’t add enough drivers to keep up with demand because of the city’s rules, leading to higher prices and less reliable service for Houston customers. The company even says Houston’s rules may have indirectly led to more drunk drivers on the streets who would’ve taken a quick, cheap Uber but one wasn’t available.

Notwithstanding the curious timing (voters in Austin will decide May 7 whether to keep similar regulations; early voting for the ballot measure started this week), it’s hard to know what to make of Uber’s claims. Officials with the City of Houston insist that, by pretty much any trackable measure, Uber has been a resounding success here. The city’s Administration and Regulatory Affairs department says that every month it sees an increase in drivers who want a license to drive for the company. And, according to city officials, judging by the company’s revenue in Houston (under the regulations passed in 2014, Uber pays 2 percent of gross bookings to the city), Uber is doing quite well.

It seems there’s either a fundamental difference of interpretation or someone’s not telling the whole truth. We’d love to get to the bottom of this, but here’s the problem: Uber has sued to block the city from releasing pretty much any internal data that could show whether Houston’s regulations have been a success or unreasonable burden for rideshares.

Lara Cottingham, deputy assistant director of the city’s Administration and Regulatory Affairs department, insists that Uber has had an undeniably good run here since the city began enforcing its rules for licensing drivers for so-called transportation network companies (or TNCs) like Uber, limo services and taxi companies. “The number of drivers is increasing, their revenue is increasing, everything seems to be working out for them very, very well,” Cottingham told us. “But because Uber sued us to stop us from releasing [those numbers], I can’t tell you how successful they are.” Uber argues that information is proprietary and could be used by competitors. 

The main point of contention between the company and city leaders appears to be the city's insistence on a fingerprint-based background check for Uber drivers that’s run through the Texas Department of Public Safety. Uber says it’s redundant and too time-consuming for part-time drivers who are just looking to make a little money on the side.

In its three-page report sent to city leaders yesterday, the company claims more than 20,000 people have completed Uber’s screening process, which includes a third-party background check run through a private company, but never got licensed with the city and therefore never became drivers. “A survey revealed that the regulations were too time-consuming, complex and expensive,” the company claims in an accompanying press release. “The majority of these respondents were minorities or individuals from lower-income neighborhoods.”

While Uber claims it takes drivers on average four months to get a city license, Cottingham says that’s just not the case. She says that according to a survey the city conducted this spring (which, of course, she can’t release because of Uber’s lawsuit), nearly half of all drivers got their license within a week of applying – almost all (about 84 percent) had a license within three weeks of applying, she claims. Whatever the case, Uber’s Meridia said in the letter to city leaders yesterday that demand in Houston “continues to grow approximately twice as fast as our ability to onboard qualified drivers.”

Cottingham says the city has streamlined the process as much as possible, but what Uber’s really asking for – axing the city’s additional background check provision – isn’t an option.

Houston’s among the cities where leaders say that simply relying on Uber’s third-party background checks presents a public safety issue. “We have had hundreds of drivers who passed Uber’s background checks but failed ours,” Cottingham told us. Offenses flagged by the city’s fingerprint-based background check ranged from robbery to indecent exposure, DWI, assault and murder. “We had one driver who had 24 aliases, five birthdates, ten Social Security numbers and an active warrant for arrest,” Cottingham said. It appears, she says, the guy cleared Uber’s commercial background check because it was based on name, birth date, address and Social Security number, all of which can be falsified.

In a “fact check” sheet Uber sent to reporters yesterday, the company batted away the question by saying those people who failed the city’s background check were probably just lying about being Uber drivers when they approach the city for a license in the first place:

“The City’s current licensing system is inherently flawed and does not confirm if TNC license applicants have actually passed Uber’s screening process. The only documentation TNC license applicants must show before applying to be a TNC driver is a 'U' trade dress sticker. These stickers, which can easily be purchased online or replicated, are not valid verification that an individual has passed Uber’s screening process.”
(Update 1:30 p.m.: In an email Thursday, Cottingham responded to that point: "At Uber’s request, the City of Houston verifies that drivers work for Uber in two ways. First, drivers are required to show a valid company trade dress (reflective or vinyl square with the “U” logo) to obtain a license. Drivers with fake or questionable trade dress are turned away and referred to Uber. Second, we send Uber an invoice of all Uber drivers who have been licensed by the City. Uber verifies that they work for Uber and then pays the City for their licensing fees.")

The question of whether Uber’s third-party background checks are good enough came under the spotlight last year just as the Texas Legislature was considering the issue, largely because of a Houston Uber driver accused of taking a blackout-drunk passenger to his apartment and raping her. According to a police officer’s affidavit filed in the case, Duncan Eric Burton admitted to taking the woman back to his place, where he had oral, vaginal and anal sex with her after she was too drunk to remember her own address, let alone give consent (Burton wasn't licensed with the city). State lawmakers, who were debating statewide regulations for rideshare companies like Uber, grilled an Uber representative on why Burton passed the company’s background check, which apparently didn’t catch Burton’s criminal history that should have rendered him ineligible to drive for the company. (Months later, Burton was inexplicably cleared by a Harris County grand jury that didn’t even bother to hear testimony from the victim.) 

Cottingham admits that Uber has changed Houston’s transportation game for the better. “We’re the fourth-largest city in the country. We love having Uber here,” she said. If you look at TNC licenses granted by the city, she says, the numbers have skyrocketed since Uber entered the picture, meaning passengers have more options than ever before. Uber's presence has been transformative.

Which could help explain why the company's now trying to leverage its sizable influence. Still, it appears some city leaders resent the ultimatum. Mayor Sylvester Turner told reporters yesterday the city “will not compromise on public safety,” adding, “This is just not how we do business in Houston.”
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Michael Barajas
Contact: Michael Barajas