Uber’s Shady Business Practices: Are They Desperate to Stay Afloat?

Uber, once hailed as a groundbreaking innovation in the ride-hailing industry, is now under growing scrutiny for its questionable business tactics. From mysterious charges and forced subscriptions to legal battles and financial maneuvers, Uber’s actions raise serious concerns about its long-term sustainability.

This article takes an in-depth look at Uber’s shady practices, its financial struggles, ongoing lawsuits, and whether these signs indicate a desperate attempt to stay afloat.

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Surprise Charges: A Weekend Trap for Customers

Many Uber users have reported being mysteriously charged for Uber One, Uber’s monthly subscription service, without actively enrolling. This is more than just an annoying billing issue—it appears to be a calculated move by Uber to make cancellations difficult.

How Uber’s Billing Trap Works:

1. Weekend Billing: Uber strategically charges customers on the weekend when customer support options are limited.
2. 48-Hour Cancellation Window: Customers who notice the charge must cancel within 48 hours, or they are stuck paying for a full month.
3. No Direct Support: Uber offers no direct phone number or email for customer service. The chatbot, the only available option, is often unresponsive on weekends.

This effectively forces many customers to pay for at least one month before they can successfully cancel. A coincidence? Highly unlikely.

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FTC Investigation: Uber One Subscription Scandal

Who is the FTC?

The Federal Trade Commission (FTC) is the U.S. government agency that protects consumers from unfair and deceptive business practices. It investigates companies accused of fraud, misleading advertising, and illegal business tactics.

Uber Under FTC Scrutiny

The FTC launched an investigation into Uber One after waves of customer complaints about being enrolled in the service without their consent and struggling to cancel. Uber claims that the cancellation process takes only 20 seconds, but many customers argue otherwise.

Key Issues Under Investigation:

• Unauthorized enrollments: Many users report being signed up for Uber One without opting in.
• Difficult cancellation: Uber’s lack of real-time support makes it nearly impossible to cancel within the 48-hour refund period.
• Potential legal violations: If found guilty, Uber could face major fines and be forced to revise its subscription practices.

This isn’t Uber’s first clash with the FTC—in 2017, the company paid $20 million for misleading drivers about their earning potential. The cycle of deception seems to be repeating itself.

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Uber’s Financial Struggles: Desperation or Mismanagement?

While Uber’s revenue continues to grow, its profitability remains shaky. In Q3 2024, Uber reported:

• $11.2 billion in revenue (a 20% increase year-over-year)
• $1.1 billion in operating income (but largely due to non-operational gains)
• Stock dropped 7% after a disappointing earnings report and weak future guidance

Uber appears to be making money, but a closer look reveals that a significant portion of its income comes from investment revaluations and financial tricks rather than its core ride-hailing and food delivery businesses.

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Uber’s Founders: Who Created This Company?

Uber was co-founded in 2009 by Garrett Camp and Travis Kalanick.

• Garrett Camp (also the founder of StumbleUpon) came up with the original idea for a ride-hailing service.
• Travis Kalanick, known for his cutthroat business approach, transformed Uber into a global powerhouse but was forced to resign in 2017 amid scandals involving toxic workplace culture, sexual harassment claims, and unethical business practices.

Although Kalanick is long gone, Uber’s controversial actions suggest that its aggressive and deceptive DNA remains unchanged.

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Major Lawsuits Against Uber

Uber has faced numerous lawsuits over the years for deceptive practices. Some of the most significant cases include:

1. Driver Pay Misrepresentation: Uber settled a $20 million lawsuit for falsely advertising high driver earnings.
2. Spam Text Messaging: Uber agreed to pay $20 million for sending unsolicited promotional texts.
3. Misleading Investors: Uber faced a securities class action lawsuit over its 2019 IPO, accused of misleading investors about its financials and passenger safety.

With the FTC investigating Uber One, another lawsuit could be on the horizon.

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Do Uber Drivers Even Make Money?

Uber’s treatment of its drivers has long been a point of controversy. Many drivers find that they:

• Barely break even after deducting expenses like fuel, maintenance, and Uber’s hefty commission.
• Face constantly changing pay structures that reduce their earnings.
• Receive no benefits, making it an unsustainable full-time job.

Uber’s dominance in the ride-hailing market remains strong, but its relationship with drivers is deteriorating—a warning sign for its future.

Uber’s Robo-Taxi Challenges: A Dying Dream?

Uber once touted self-driving robo-taxis as the future of transportation, but reality has proven far less promising. Several major cities are now restricting or outright banning robo-taxis due to safety concerns and technical failures.

Key Issues Facing Uber’s Robo-Taxi Ambitions:

• Frequent Accidents: Autonomous vehicles have been involved in multiple high-profile crashes, leading to public backlash.
• Regulatory Hurdles: Cities like San Francisco and Los Angeles are pushing back against widespread robo-taxi deployment due to pedestrian safety concerns.
• Technological Limitations: Uber’s AI-driven vehicles still struggle with unpredictable traffic conditions, making them unreliable.

As a result, Uber has scaled back its self-driving division and sold much of its autonomous tech to Aurora Innovation. This suggests that Uber’s robo-taxi dreams may be fading faster than expected.

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Red Flags: Is Uber in Trouble?

Several warning signs suggest that Uber’s future is uncertain:

• FTC Investigation into deceptive Uber One subscriptions.
• Slowing growth in bookings as customers protest rising fares.
• Increasing lawsuits from customers, drivers, and regulators.
• Stock volatility, with significant drops after earnings reports.

While Uber is not on the brink of bankruptcy, its continued reliance on shady revenue tactics and dwindling customer trust could pose long-term problems.

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Potential Accounting Fraud at Uber?

Some analysts believe that Uber may be engaging in financial misrepresentation. In Q3 2024:

• Uber reported $2.6 billion in net income, but $1.7 billion of that came from revaluing investments, not from actual business operations.
• The company consistently relies on non-operational income to improve its financial reports.

While no formal accusations of accounting fraud have been made, Uber’s history suggests that this possibility cannot be ignored.

Similar Account Frauds That Led to Company Collapses

Uber’s deceptive tactics bear resemblance to past corporate frauds that contributed to major bankruptcies:

• MoviePass (2011-2019): The subscription-based movie ticket service lured customers with an unsustainable business model. It later secretly changed users’ passwords to prevent excessive usage, leading to lawsuits and bankruptcy.
• Enron (1985-2001): The energy giant manipulated its financial statements with fraudulent accounting, hiding billions in debt. Once exposed, Enron collapsed and filed for one of the biggest bankruptcies in U.S. history.
• Theranos (2003-2018): The health-tech company falsely claimed to have revolutionary blood-testing technology. After SEC fraud charges, the company dissolved, and its CEO was convicted.
• Lehman Brothers (1850-2008): The investment firm engaged in accounting tricks to hide debt, contributing to the 2008 financial crisis and its eventual bankruptcy.

If Uber continues its current trajectory of financial manipulation and deceptive customer billing, could it be heading for a similar fate?

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Final Thoughts: Is Uber Running Out of Legitimate Ways to Stay Afloat?

Between hidden weekend charges, non-existent customer support, forced subscriptions, lawsuits, FTC investigations, and questionable financial health, Uber appears to be more focused on short-term survival than long-term sustainability.

A Challenge to You: Before your next Uber ride or food delivery, check your bank statements. Are you unknowingly funding Uber’s desperate revenue tactics? That extra charge you didn’t notice might be ruining your appetite for more than just a meal.

Uber is still a major player in the ride-hailing industry, but if it continues down this path, will customers and investors eventually abandon ship?

Only time will tell, but one thing is clear: Uber’s future looks far less certain than it did a decade ago.

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Disclaimer: This blog article is for informational purposes only and should not be considered financial advice. Everyone’s financial situation is unique. Always consult with a qualified financial advisor or planner to assess your individual circumstances before making financial decisions.