Chicago cab companies sue ‘hip’ car service Uber for pocketing 50% of driver tips

Taxi companies in Chicago want to run upstart car service, Uber, out of town. In a complaint filed Thursday in federal court, a coalition accuses Uber of trademark violations and consumer fraud for keeping a portion of the drivers’ tips.

The complaint says Uber is deceiving consumers about the amount they pay for the fares:

Uber adds an automatic “20% gratuity” onto the metered fare. Uber misleads the public and fails to disclose to consumers that only half of such “gratuity” actually goes to the driver. The remaining half, in fact, goes to Uber.

The taxi groups also claim that marketing terms like “Uber Black Car” and “Uber Taxi” violate trademark laws because they confuse consumers.

The Chicago dispute is the latest and most dramatic episode in a battle that is playing across the country as Uber competes with the powerful taxi lobby in various cities. The upstart has become a hit because it allows customers, who place their credit cards on file, to quickly summon a car with an app that recognizes their location and customers can rate the drivers at the end of the trip.

The taxi lobby is leaning heavily on city governments to shut down the service, claiming it is a danger to the public. In this week’s court complaint, the cab companies blast Uber for creating a two-tier taxi service that caters to rich hipsters (emphasis ours):

While Uber advertises itself as “Everyone’s Private Driver”—that is in fact a gross mischaracterization as Uber only chooses to cater to what it perceives as the technologically elite and well-off individuals. It is obvious that through Uber’s marketing it caters to young, hip, urban professionals, which is perfectly reasonable on the livery side. But using the publicly regulated (and limited number) taxis in order to create a two tier system— “high quality taxis” for the “haves” and the remainder for the “have nots”—runs contrary to the many ordinances enacted in Chicago to ensure non-discriminatory service for everyone in Chicago, not just those “cool” enough to use Uber.

The complaint, which is embedded below, seeks an injunction against Uber and damages to compensate the cabbies for lost profits.

Meanwhile, consumers have filed a separate class action lawsuit claiming they overpaid for Uber’s rides.

Update: This story has been amended to clarify that taxi companies, not drivers, are suing Uber. See Uber CEO Travis Kalanick’s comment below.

Yellow Cab v Uber
(Image by  sababa66 via Shutterstock)