Home >> Business

Uber to pay $10 million to settle background check lawsuit

San Francisco: Ride-hailing company Uber has agreed to pay $10 million to settle allegations by California prosecutors that passengers were misled by the company about the quality of the background checks conducted on its drivers.

Uber signed the settlement in San Francisco on Thursday. It is to be noted that Uber is based in San Francisco. The district attorney had led a lawsuit claiming that false claims were made by Uber about its criminal screening of would-be drivers was the most comprehensive available.

Uber was sued in 2014 by San Francisco and Los Angeles prosecutors. In the lawsuit, it was claimed that the background checks conducted by Uber were inferior to what taxi drivers undergo because they did not include fingerprint checks for past convictions. Instead, the process approved by Uber relies on a name search of other criminal databases and motor vehicle department files going back seven years.

Uber has strongly defended the safety of its service amid allegations that its drivers have assaulted passengers, or, in the case of a driver in Michigan earlier this year, killed people. The app lets passengers share their location in real time, Uber says, remarking that the passengers are required to rate the driver after each trip, helping weed out unsavory characters.

Under the settlement, Uber agreed to pay $10 million within 60 days. If the company fails to comply with the terms over the next two years, it would have to pay an additional $15 million, prosecutors said.

"It sends a clear message to all businesses ... laws designed to protect consumers cannot be ignored. The result we achieved today goes well beyond its impact on Uber," San Francisco District Attorney George Gascon said in a written statement. "It sends a clear message to all businesses, and to startups in particular, that in the quest to quickly obtain market share, laws designed to protect consumers cannot be ignored."