Uber announced that it has reached a settlement in two putative class action lawsuits, Philliben v. Uber Technologies, Inc. and Mena v. Uber Technologies, Inc., which alleged that Uber’s labeling of a $1 charge as a “Safe Rides” fee was misleading.  Plaintiffs sought approval from the U.S. District Court on February 11.  The pair of lawsuits was filed in the wake of a civil action brought by the San Francisco and Los Angeles District Attorneys’ offices which similarly claimed that statements by Uber concerning the quality of its background checks (e.g., the “gold standard,” “industry leading,” and “best-in-class”) were misleading because the form of background checks used by Uber (and many other gig economy companies) relies on social security numbers and other identifiers, rather than fingerprints.  The DAs claim that fingerprint-based background checks required for taxis are more effective, despite studies showing that such background checks, which utilize the FBI and/or state DOJ criminal history databases, are incomplete, plagued by inconsistent reporting, and disproportionately impact individuals of color by, for example, reporting on arrests which did not lead to convictions.

Under the settlement, Uber would agree to pay $28.5 million to approximately 25 million riders.  In addition, Uber will agree to relabel the fee as a “Booking Fee,” which may be described as “a separate flat fee added to every trip that helps support safety initiatives for riders and drivers as well as other operational costs.”  It has further agreed to avoid certain specified representations regarding its background checks.

A similar lawsuit was filed last in June of last year in San Diego Superior Court, captioned San Diego Consumers’ Action Network v. Lyft, Inc., filed in June of 2015.  Although Lyft was also sued by the San Francisco and Los Angeles DAs, Lyft settled that lawsuit last year.   The San Diego litigation is ongoing.

Despite the Uber settlement, the issue of how best to conduct background checks for transportation network companies, such as Uber and Lyft, and other gig economy participants, will not go away.  Taxi interests and other regulators claim that background checks using biometric data to query the FBI and DOJ criminal history databases are more reliable and have broader reach, while gig economy companies point out that biometric background checks are both under and over-inclusive, are costly and time-consuming, and do not result in enhanced safety.  They also contend that third-party background check services such as Hirease, Sterling Backcheck, and Red Ridge, which utilize a variety of identifying data, including social security numbers, to query a broader and more comprehensive collection of databases, are more efficient and effective.

In a further indication of the continuing focus on background checks, the California Public Utilities Commission recently issued a Proposed Decision which would require TNCs that transport unaccompanied minors, such a Shuddle and HopSkipDrive, to utilize the fingerprint-based Trustline registry for background checks.  The Proposed Decision also indicated that the question of background checks for charter party carriers generally would be further addressed in Phase III of the ongoing rulemaking on TNCs.