A new car service that allows Chicago taxicab riders to use their smart phones to order cabs is in hot water with City Hall for tacking a 20 percent tip onto the metered fare.
Rosemary Krimbel, commissioner of the city's Department of Business Affairs and Consumer Protection, said the city has ordered Uber to cease and desist and has initiated a process of "progressive discipline" that could prompt the city to revoke their license.
"[Uber competitors] Snag Cab and Hailo make their smart phone app revenue from advertising. They have a different model. Uber's model is that they allegedly mandate a 20 percent tip, then they split it with the driver," Krimbel said Thursday after testifying at City Council budget hearings.
"If they want to suggest a tip like every single backseat credit card machine does--it suggests a 10, 20 or 30 percent tip--that's fine and we told them that. But, their whole business model is a problem because of how they charge. They're gonna eventually have to change or they will be revoked."
In Chicago and elsewhere around the country, taxicab companies have filed lawsuits accusing Uber of consumer fraud and violating trademark laws.
They're claiming the company deceives passengers by failing to disclose that the 20 percent tip is actually divided between Uber and the driver. They're further alleging that the company's attempts to market itself by using terms like "Uber Taxi" and "Uber Black Car" violate trademark laws.
Krimbel is not about to get in the middle of that ongoing legal battle. But, she said, "They're not a threat [to the taxicab industry]. If anything, they enhance taxi service in the city."