Uber has been refused a new licence to continue to operate in London for putting “safety at risk,” after thousands of users took uninsured trips with individuals pretending to be authorised drivers.
The company’s shares (UBER) slid 5.6% in pre-market trading in New York as it vowed to appeal the “extraordinary and wrong” decision by transport chiefs. It said it had recently audited every London driver.
A union for London private-hire drivers called it a “hammer blow” to tens of thousands of self-employed drivers, warning they could not only lose their income but also struggle to pay their car lease debts.
But Transport for London (TfL) said it had discovered Uber allowed passengers to take at least 14,000 uninsured trips with unauthorised drivers, who were able to upload their own photos to actual drivers’ accounts.
Officials said Uber’s systems had been “easily manipulated,” with all such trips uninsured. Some drivers also lacked a minicab licence, and one had even previously had their licence revoked.
The company has three weeks to appeal against TfL’s decision that it is not “fit and proper” to operate, and can keep services running throughout the appeal process.
The taxi app firm could be cut out of one its biggest markets in the world if it cannot overturn the ruling. Millions of passengers would be unable to use the popular app, and a reported 45,000 drivers would be forced to find work elsewhere.
Last-ditch talks are reported to have taken place over the weekend as Uber lobbied for its right to continue in the capital.
Transport for London said in a statement: “Safety is TfL’s number one priority. Uber has made a number of positive changes and improvements to its culture, leadership and systems in the period since the chief magistrate granted it a licence in June 2018.
“This includes interacting with TfL in a transparent and productive manner. However, TfL has identified a pattern of failures by the company including several breaches that placed passengers and their safety at risk.
“Despite addressing some of these issues, TfL does not have confidence that similar issues will not reoccur in the future, which has led it to conclude that the company is not fit and proper at this time.”
The taxi app firm has been embroiled in a long-running battle with TfL, chaired by mayor Sadiq Khan, with a city ban announced in 2017 after it failed to pass the fit-and-proper person test.
TfL had previously accused Uber of failing to report criminal allegations made against drivers to the police, found fault with its criminal record and other checks on drivers and claimed it used software that could help it avoid regulation. The company has also faced criticism over working conditions for drivers.
The move sparked anger among users and Uber began a high-profile campaign against TfL, including a petition that gained more than 850,000 signatures.
Uber initially appealed the decision by disputing TfL’s claims, but court documents show it later accepted the ban had been justified.
In July last year a judge then granted Uber a temporary licence for 15 months, saying its directors were “trying to change the corporate culture” but imposing new conditions.
It was then granted a two-month extension in September, with TfL saying they wanted more time to assess how Uber operates before making a longer-term ruling. Transport officials also imposed further rules on ride-sharing, appropriate insurance for drivers and company checks on driver documents.
Jamie Heywood, Uber’s regional general manager for northern & eastern Europe, said: “TfL’s decision not to renew Uber’s licence in London is extraordinary and wrong, and we will appeal.
“We have fundamentally changed our business over the last two years and are setting the standard on safety. TfL found us to be a fit and proper operator just two months ago, and we continue to go above and beyond.
“On behalf of the 3.5 million riders and 45,000 licensed drivers who depend on Uber in London, we will continue to operate as normal and will do everything we can to work with TfL to resolve this situation.
"Over the last two months we have audited every driver in London and further strengthened our processes. We have robust systems and checks in place to confirm the identity of drivers and will soon be introducing a new facial matching process, which we believe is a first in London taxi and private hire."
James Farrar, chair of the United Private Hire Drivers branch of the Independent Workers of Great Britain union, said: "The mayor’s decision to once again deny Uber a license will come as a hammer blow to its 50,000 drivers working under precarious conditions.
“Many will now face the distress of facing not only unemployment but also crippling debt as they struggle to meet car lease payments.”