Uber faces fraud challenges in industry it redefined

Estimates vary widely, but ridesharing pioneer Uber Technologies Inc., commonly known as Uber, could be valued anywhere from $50 billion to $100 billion. (See Benchmark says Uber could be ‘comfortably’ worth over $100 billion in next couple of years, by Megan Rose Dickey, TechCrunch, Aug. 7, 2017.) Few organizations reach this level of valuation before going public, and fewer still have faced as many allegations of improper, illegal or unethical behavior as Uber. Almost without exception there’s a weekly story about Uber that could, if confirmed, potentially ruin its high valuation.

Few companies have disrupted an industry like Uber since its founding in March 2009. In just eight years, Uber’s innovative technology, avant-garde business model and marketing prowess have helped make it an industry leader that boasts a presence in 674 cities across 83 countries worldwide, as of press time. (See Uber Revenue and Usage Statistics, by Artyom Dogtiev, Business of Apps, Sept. 26, 2017.)

Apart from drawing the scorn of industry regulators across the globe, Uber has been at the center of multiple fraud and workplace harassment allegations and numerous U.S. Department of Justice (DOJ) investigations. (See Uber reportedly cooperating with U.S. investigation on possible overseas bribes, by Paresh Dave, Los Angeles Times, Aug. 29, 2017.)

According to one Uber executive I talked to, who requested anonymity, the DOJ is conducting no less than six current investigations involving Uber.

Of course, living in San Francisco — the location of Uber’s global headquarters — has made this even more interesting for me. I have many connections in my business network who’ve worked for or are currently employed by Uber. I myself am a fan of Uber’s service because riders can easily order and pay, and the overall quality of the rides I’ve taken has been high. Uber has not only changed an industry but the underlying fraud profile of that industry.

Here in part one, I’ll look at various fraud risks created by Uber and its competitors. In part two, I’ll take a deeper dive into the various allegations raised against Uber. We’ll see, from a fraud examiner’s point of view, the lessons we can learn.