“The Greyball app basically helps detect potential law enforcers and diverts its drivers away from any potential contact with police or code enforcement officials…”
In a day and age when public transportation like taxis, buses, ferries, trains, and private-hire rides like Uber and Lyft are rather ubiquitous, the race to get the fare may seem unfair. In order to compete, some may go out of their way to snag passengers. But one huge ride-share company also goes out of its way to avoid regulations and paying its fair-share of commerce taxes.
Private-ride operator Uber has reached enormous success and is eating a large slice of the transportation pie, but it continues to exploit markets where it has no legal permissions to operate. Hence, law enforcement and transportation regulation officials in many cities have been playing cat-and-mouse with Uber principles. Under the guise of Joe Citizen, cops try to snag a ride in order to make a case against a driver for “Operating Without a Transportation License” or whatever similar statute(s) may be in effect for any particular jurisdiction.
In Tampa, Florida, the Public Transportation Commission (PTC) has law enforcement jurisdiction over licensing, regulating, and investigating entities that carry pedestrians. Taxis, limousines, ambulances, buses, and wrecker operators are within the PTC purvey. Primarily responsible for ensuring proper licensure and fair (read fare) business practices of operators collecting fees for transportation, PTC agents are armed law enforcement officers in civilian attire tasked with holding operators accountable.
Uber operated its fleet of private drivers to pick up citizens until the PTC put together its case against Uber’s illegal activities, namely functioning and collecting revenue under the radar, and skirting governance and commerce fees. Tampa authorities and Uber executives have since ironed out legal ramifications and reached an amicable solution—applied, paid, approved, and licensed. Tampa safeguarded its domain but not all cities have.
The Black and White of Greyball
A New York Times’ feature story detailed Uber’s covert use of certain app technology to detect and thwart efforts of law enforcers in various jurisdictions in order to continue its operation without legal grounds or having to pay its fare share. I call that circumvention of the law. Tacitly, it is also construed as self-incriminating.
Some current and former Uber associates admit the ride-share service has been using the app, known as “Greyball,” since 2014 or so. The Greyball app basically helps detect potential law enforcers and diverts its drivers away from any potential contact with police or code enforcement officials. The brainchild of expert computer programmer and Uber CEO Travis Kalanick, the ride-share app is widely known, and expanding to additional markets. Officials in locales all across the globe would be wise to preclude Uber’s dodgy tactics by figuring out a way around this app. Better yet, Uber’s reputation would be less sullied if it were to apply itself ethically and legally instead of gaming the system with an app.
Dividends or Deficiencies?
What does it all mean? Who cares? Well, if you are in a jurisdiction where Uber has been avoiding the legal aspects of applying and obtaining proper licensure (local government revenue producer), your town or city is not receiving tax-based fees to provide optimized services where you live, shop, and go on about your life. Look at it another way. If a business in your town opens without a merchant license and sells you goods, you are in possession of illegal merchandise and your city’s economic vitality is diminished. If public safety, education, sanitation, or parks or roadways in your city lack, Uber can be held to account for not legally investing in your locale’s tax revenue base.
Targeted Enforcement
Between police officers and code enforcement officers, stings to catch illegal Uber activity can result in civil fines, and the towing and impounding of Uber drivers’ cars. As has happened in other cities, Uber vehicles in Tampa were impounded, which resulted in Uber paying to get their drivers’ cars out of hock. How do businesses recoup such revenue losses? Usually, they pass it on to the consumer in the form of “surcharges” or another similar animal. Doing business right from the get-go avoids all these costly extras, perhaps ultimately passing the savings on to the consumer.
Like Tampa’s PTC, regulatory agencies exist to ensure law abidance by properly vetting operators, by licensing those who meet muster, and by enforcing activities outside the scope of legitimate business practices. All this is performed on behalf of safety and consumer protection, unless you somehow trust Uber’s ethics.
Consumers are in the middle of this cat-and-mouse game between Uber and the law. By pocketing all of its ride-share proceeds, one can infer that each city not doing what Tampa did is being grossly cheated. Commerce is currency, and currency from commerce is taxable.
Obstruction of Justice?
To understand the problem from a legal perspective, let’s examine the Portland, Oregon investigation where city code enforcement officials launched a sting to nab Uber drivers operating against city ordinances. Under Oregon’s Obstructing Governmental or Judicial Administration law, Kalanick and company may have constituted violation by using the Greyball app to “obstacle” the pathway of investigators and impact a city by means of “economic interference.” Oregon’s statute reads:
“A person commits the crime of obstructing governmental or judicial administration if the person intentionally obstructs, impairs or hinders the administration of law or other governmental or judicial function by means of intimidation, force, physical or economic interference or obstacle.”
Depriving Portland of its sovereign rights to license, regulate, tax, and enforce any commercial entity operating on its playing field is categorically evasion and transgression.
If Uber executives condone using the Greyball app to deter cops from lawfully investigating Uber operations, a probable cause writ for Obstruction of Justice could be made. Strategically duping police officials for the seeming purpose of avoiding compliance also calls for an ethics inquiry.
According to numerous reports, CEO Travis Kalanick delegated “general managers” running Uber operations in regions to employ Greyball. Did he (and designee GMs) contextually meet the standards for a federal RICO Act case? Beyond the state level, a US attorney crafting a federal RICO Act indictment will most certainly garner the attention of Mr. Kalanick and company.
Hong Kong Police Spank Uber
Unlike the Portland, Oregon sting which was stranded by Uber’s Greyball app, Hong Kong police officials had better results. They set their sting in motion and raided UberAsian HQ. TechCrunch.com published a story in August 2015 which spelled out how Hong Kong cops arrested and charged several Uber employees with violations of its “hire car permit” laws.
Although this appears to be another tangle of technology, commerce, corporate arrogance, along with a business undermining the law, playing fair is simply done by complying with rules, as Uber has begrudgingly done with other cities when challenged. Uber valuations are said to be in double-digit billions, so I am fairly certain Uber can do the right thing up front versus testing law enforcement authorities from city to city.
Interestingly, “Uber” is German for “above” and “over.” It is fair to say Uber portrays itself as above the law and plays cat-and-mouse games to get over on law enforcement officials, but every reckless ride comes to an end point.
Stephen Owsinski is a Senior OpsLens Contributor and retired law enforcement officer whose career included assignments in the Uniformed Patrol Division and Field Training Officer (FTO) unit. He is currently a researcher and writer.
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