Uber on thin ice in India after driver rape accusations

Just as Uber thought it had solved one thorny problem in India vis a vis a solution to a payments conundrum, another much graver one now confronts the company. And this time, it has invoked the wrath of a force much greater than India's Reserve Bank: Indian consumers.

Just when Uber thought it had solved its India problems, about which I had written previously here, another one has rocked it with a seismic intensity high enough to threaten its existence in the country.

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Earlier in the year, Uber had drawn the ire of the Reserve Bank of India for using a Netherlands payment gateway for routing its transactions, which bypassed the two-step authentication process necessary while using a credit card in the country. It thereby also flaunted India's foreign exchange regulations. Since then, the company teamed up with online wallet Paytm to devise a solution, but the union has apparently not been as smooth as envisioned earlier. Regardless, the current debacle that the company finds itself mired in makes its travails with online payments look like a quaint dream.

On Friday last week, a woman -- a financial analyst from Delhi -- hired an Uber cab after attending a dinner party, and had fallen asleep on the way home. When she awoke, she found the doors locked and the car parked in an unfamiliar, secluded place. She alleges that the driver then raped her and dropped her home.

When news of the incident broke, the Delhi government promptly banned Uber from functioning in the nation's capital. It also ordered all app-based taxi services, such as Taxi-for-Sure, Ola, Quick Cabs, Delhi Cab, Wyn, and Cosy, to stop operations. The country's Home Ministry is going one step further by asking all state governments in the country to make sure that Uber doesn't ply their roads again -- a death knell for the company if it goes through, and a bitter pill, as the company has already gained significant traction in the top 10 metropolitan areas of the country.

Is the ban justified? Indians are irate to learn that Uber employed the driver Shiv Kumar Yadav, 32, despite the fact that he had, a few years ago, spent seven months in Tihar, the country's largest jail, on, unbelievably, rape charges -- although he says that they were eventually never proven. Apparently, the company verified his past, but he had coughed up a forged police certificate. Uber drivers in India say that for $130, a certificate of good character can easily be procured, so that's not a shocker.

Curiously, Uber CEO Travis Kalanick, while trying to placate Indians regarding Uber's role in the affair, appeared to punt the responsibility for verification over to the Delhi government by saying. "We will work with the government to establish clear background checks currently absent in their commercial transportation licensing programs."

That may be a sneaky-but-smart short-term ploy, but Indian police authorities say that if they find any evidence of the app service misrepresenting the safety of its service, they will be looking into filing criminal charges. Another potential nail in Uber India's coffin: A woman had complained about the same driver to Uber mere days before the alleged rape incident, but the company appears to have done nothing about it.

The problem for Uber is that it has widely touted safety as what sets it apart from its rivals, and most Indian users have bought its gospel. Uber's India website's subsection titled "Safety" gets you to a more general page that says the following things: "Background checks you can trust: Every ridesharing and livery driver is thoroughly screened through a rigorous process we've developed using constantly improving standards."

It's safe to say that whoever is responsible for doing these checks -- whether they are being done at all -- the fact is, they definitely aren't working.

Another Uber driver in a recent Mint article about the alleged rape said that he only received training on basic etiquette and using the mobile app, and forwarded his driver's licence and ID card to the company. There was no talk of a police check or anything similar. He wasn't even interviewed for the job. This widely tracks with the experiences of other Uber drivers around the world, which I wrote about here.

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Uber is not a registered radio taxi company with the Delhi transport department like the more bricks-and-mortar taxi operators such as Meru Cabs. Observers say that these companies necessitate that their drivers apply for loans to lease the taxi from the company, and the process requires rigorous screenings. This in itself assures a certain quality of drivers with the right kind of backgrounds, and not just some lout -- or in this case a rapist -- with a car and a smartphone.

Then again, an Australian woman around 10 years ago was killed by the driver and an accomplice of a prepaid taxi she had picked up at Delhi airport. These are government-authorised cars where licence numbers and names are registered before the ride. It is also widely known that often, relatives and friends are allowed to drive these cars when the original driver is on a holiday or off duty.

There are those who view the ban on Uber as a knee-jerk response that has emerged because of a basic ignorance of the fast-paced and constantly morphing world of e-commerce.

"From the reason that the Delhi regulator has given for the ban, it looks like this is a case of regulators not understanding the business models of cab companies," said Abhishek Goenka, a partner at BMR Advisors and Co LLP, which advises e-commerce companies, to Mint newspaper.

"In current law, there's a grey area about cab-booking services, and this needs to be resolved. But the cab-booking companies are legal entities, and I don't see how they can be banned outright. The issue is that the licence of the holder -- the driver -- needs to be valid. But the cab companies themselves don't need licences because neither do they own the cars, nor do they employ the drivers," he added.

Someone else who appears to be on Uber's side: No less than Indian Minister of Transportation Nitin Gadkari.

"It doesn't make sense to ban services. Tomorrow, if something happens on a bus, we can't ban that. It is the system that needs to be changed. Banning will only cause inconvenience to the people," said Gadkari.

Indians throughout the country may not see eye to eye with him. Instavaani, a polling outfit, canvassed the opinions of 1,118 respondents throughout urban India to gauge their perception of who is to blame.

It was no contest: 76 percent of the respondents lay the blame at Uber's wheels. Not surprisingly, 81 percent of women blamed Uber. Information about other Uber policies such as its $1 "Safe Rides Fee", which is an extra charge levied in North America if users want a thorough screening of drivers, is now being seen elsewhere as more proof of the callous, money-grubbing mentality of the company.

The campaign against Uber is quickly spreading to other areas. Closer to home, the city of Portland sued on Monday to bar the company from doing business there, mere days after the company started operations sans permission from local government bodies. "Our main concern is public health and safety," said Charlie Hales, mayor of Portland.

San Francisco and Los Angeles have also sued the company in the last day or two. Elsewhere, in Spain and Thailand, bans have been issued in the last day to prevent the ride-share service from operating.

Uber will fervently hope that a critical market like India will not follow their example.