Ride-hailing giant Uber cost itself $150,000 in suburban Maryland after failing to activate a fee increase that was scheduled to go into effect in March, the company said this week.
The company said it would assume the full costs of the error. Uber laid out the issue in a memo to drivers last week.
“As of March 4, 2017, Uber announced that the booking fee in Greater Maryland would be increasing from $2 to $2.35,” Uber said. “Due to an error, these announced changes were not in effect between March 13 and June 1 2017.”
Uber said it corrected the problem Friday. The booking fee, previously called the “safe rides fee,” supports regulatory costs, safety initiatives and operating costs, the company says. The undercharging didn’t interfere with safety initiatives or regulatory obligations in Maryland, according to Uber.
Uber was forced to rename the safe rides fee after a class-action lawsuit accused it of not actually committing the funds toward vehicle inspections and driver training.
The problem was exclusive to the greater Maryland coverage area, which encompasses Annapolis and outer suburbs in Maryland, but not Washington or Baltimore, the company said. Uber typically collects a 20 percent to 25 percent commission from drivers and deducts the booking fee in a separate calculation.
Uber declined to say what caused the error or how it was discovered, but it was yet another accounting lapse — albeit a significantly smaller one — for the embattled ride-hailing company as it recovers from a major financial oversight in New York.
In that instance, Uber collected tens of millions more from New York City drivers than it was supposed to over a three-year span dating to November 2014. The company last month pledged to reimburse drivers an average of $900 each, including interest.
Uber said the error stemmed from the company’s failure to adhere to a 2014 adjustment to commission calculations in New York.
Maryland adopted more rigorous background screenings for ride-hailing firms late last year — including lifetime screenings and timely follow-ups — but it was unknown whether Uber’s decision to raise the booking fee was related. The Maryland Public Service Commission, which regulates ride-hailing in the state, said Uber gave the required notice of two weeks in February before raising its booking fee in March.