I-Team: Critics Say Uber’s Vehicle Leasing Option Is ‘Predatory’

BOSTON (CBS) – Thousands of Massachusetts drivers make their living working for ride-hailing services like Uber. It’s an opportunity available even to those who don’t own a car. But some critics say Uber’s leasing affiliate is taking advantage of people and now the company has caught the attention of state investigators.

The opportunity to lease a car through Xchange Leasing, an arm of Uber, sounded like a great idea to one local driver. “Unlimited miles, no credit check it sounds so simple,” he said.

But the driver, who did not want to be identified because he is afraid speaking out would risk his job, said he quickly realized it was too good to be true. “With insurance it was over $1,000 a month, without it, it is $750,” he said.

Here’s an example of an offer from Xchange Leasing. You can drive a used 2016 Toyota Corolla for weekly payments of $161 over three years, totaling more than $25,000, plus taxes and fees. A similar car lists online in the Metro West area for just $13,000.

uber2 I Team: Critics Say Ubers Vehicle Leasing Option Is Predatory

Uber Xchange Leasing (WBZ-TV)

“Uber is very much setting itself up as a predatory lending mechanism,” explained Boston University Business professor Mark Williams. In addition to the high weekly rates, Williams has an issue with an unusual model of taking payments directly out of the Uber Drivers’ paychecks. “What Uber is saying is we don’t trust you to pay us, so we are going to take the money up front. We are going to minimize our risk,” he said.

That arrangement caused huge problems for this driver and others who reached out to the I-Team when they had toll violations they never knew about. “I incurred tolls and fees and they kept adding up,” the anonymous driver told us.

uber I Team: Critics Say Ubers Vehicle Leasing Option Is Predatory

Uber (WBZ-TV)

Xchange Leasing didn’t notify drivers or pay the fines until they racked up hundreds of dollars in late fees. Then they just took the money from the drivers’ accounts. “They have access to my checking account and they were just taking money. They took over $1,500,” the driver said.

Xchange Leasing refused an on camera interview, but the general manager told the I-Team a company hired to handle the tolls and fines was fired and that drivers were eventually reimbursed with a $150 bonus for their trouble.

The company also said Xchange offers drivers an opportunity they couldn’t get elsewhere and the leases are fairly easy to get out of.

uber3 I Team: Critics Say Ubers Vehicle Leasing Option Is Predatory

Uber screenshot (WBZ-TV)

The I-Team was also told drivers could opt out of the automatic lease deductions. However, the terms the company sent to use clearly state – “To qualify for the program you must sign a payment deduction authorization agreement with Uber.”

According to professor Williams, the arrangement seems to be taking advantage of drivers who have no other choice. “Clearly they have to have a car to make money, but the car is more expensive than it’s worth,” he said.

The Uber driver told us he is now using his own car and is much happier. “I wouldn’t recommend a lease to anyone; it’s a complete nightmare,” he said.

The I-Team has learned the Attorney General’s Office has received a number of similar complaints and they are reviewing them. They are also urging anyone else that has a problem with Xchange Leasing to contact their office.

More from Ryan Kath
Comments

One Comment

  1. Another reason why 96% of Uber drivers quit every year.

  2. This seems unsafe, another reason to just ride in a taxi. I use the taxi app E-HAIL (www.goehail.com) same convenience but real drivers.

  3. Scott Myers says:

    Regarding:
    ‘“What Uber is saying is we don’t trust you to pay us, so we are going to take the money up front. We are going to minimize our risk,” he said.’

    What Uber is really saying is “We know you will be lucky if you can even gross enough to make the payment, so that is why we are taking it up front”

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