Uber to rethink cash strategy

On a Thursday night last September, Uber driver Osvaldo Luis Modolo Filho accepted a ride request from a teenage couple on the eastern edge of Sao Paulo, to be paid in cash.

A few blocks from their destination, the passengers – who hailed the ride on the Uber app with a false name – drew two blue-handled kitchen knives. They repeatedly stabbed the 52-year-old driver and drove away with his black SUV as he lay bleeding in the road. Two of his fatal wounds were so deep police would first mistake them for bullet holes.

Police later found the car, arrested the couple and accused them of murder in the service of car theft. They are awaiting sentencing and lawyers for both have vowed to appeal.

Uber said Modolo Filho was its first driver to be murdered in Brazil. He would not be the last. Police have confirmed six murders since his death, with local press reporting more than a dozen.

A Reuters analysis of crime data obtained by public information request from Sao Paulo’s state security secretariat showed a spike in robberies involving Uber drivers since July, when the company started accepting cash payments in the city, raising questions inside the company as to why it did not act faster to address the problem.

Traditionally, Uber has charged rides to credit cards registered by users, offering an easy way to verify passengers and track them down if needed. It changed that policy across Brazil last year, allowing customers to pay with cash to turbo-charge growth in a crucial new market.

Demand took off, but so did crime. In Sao Paulo, robberies involving Uber drivers rose ten-fold, the data shows. Attacks rose from an average of 13 per month in the first seven months of 2016, reflecting some degree of danger even before the cash option took effect, to 141 per month in the rest of the year, the data shows.

Assaults involving regular taxi drivers in the city rose by just a third in the same period, according to crime data obtained by a separate freedom of information request filed with same security officials, as a deep economic downturn lifted all robberies in the city about six percent.

The crime data obtained by Reuters covers Jan. 1 to Dec. 31 2016 and shows all incidents of robberies involving taxi and Uber drivers. It contains some margin for error as it potentially includes attacks on passengers.

Police told Reuters the number of attacks on Uber drivers could be much higher given it is a new service and many incidents were likely registered in the system without mentioning the app by name.

Drivers and police told Reuters the cash policy has provided easy targets for criminals, allowing them to open accounts under fake names, without credit cards to verify, and lure drivers into ambushes.

Presented with the findings, Uber declined to give monthly details of ride growth in Sao Paulo but acknowledged it has seen an increase in "safety incidents" without saying by how much. Uber said it was not clear if rising crime was due to the cash policy or the surge in business, which was boosted by the cash option. Uber added its Sao Paulo operations grew by 15 times over the course of 2016. The company said it is now taking steps to make cash rides safer, such as verifying users with a commonly used social security number.

Getting cash payments right in Brazil is a crucial test for Uber as it pushes beyond developed markets, seeking faster growth in poorer countries, where credit cards are less common and public safety more precarious.

Drivers around the country have staged protests threatening to quit if Uber does not reduce the risk of crime, while taxi drivers and elected officials have pounced on isolated incidents as evidence of a need for more restrictive legislation.

So far, Uber's business in Brazil is booming. At least 30 percent of its rides in the country are now paid in cash and the rate is far higher in poor areas where credit cards are less common, according to two company sources. In Sao Paulo, cash accounts for most trips in outer boroughs, and the sources said it helped the city overtake New York and Tokyo in recent months to become Uber's biggest market by rides.

But a dozen current and former managers and drivers criticized how Uber introduced cash in Brazil, saying the San Francisco-based tech giant overlooked high levels of violent crime as it rushed to grow in an unfamiliar market. Senior executives now admit publicly that the company was slow to introduce simple fixes once the dangers in Brazil were clear.

Nampa/Reuters