Avoiding Uber Trouble via Good Terms of Service

In a recent lawsuit, Uber Technologies Inc. is accused of violating California’s Unfair Competition Law. Specifically, the complaint alleges that Uber misleads its users by: (1) falsely advertising its services as cheaper than a typical cab company for specific routes when its services can actually be more expensive during certain peak times, and (2) presenting offers for free ride credits in exchange for referring business without notification prior to the users making the referral that the free ride credits will expire. Although the allegations in the lawsuit do not mention Uber’s terms of service, the facts alleged in the lawsuit highlight the importance of having comprehensive terms of service.

To give a little context, terms of service (also known as “terms of use” or “terms and conditions”) are rules which a user of a service must acknowledge and agree to abide by to use the service. In many instances, a company can successfully obtain early dismissal of a lawsuit by relying on its terms of service. For example, if a lawsuit is brought against a company for misleading users solely on the grounds of allegedly failing to give notice of certain limitations, but those limits are clearly set forth in the company’s terms of service (and do not violate federal or local laws or regulations), the lawsuit may usually be dismissed very early in litigation.

As of the date of the writing of this post, for instance, Starbucks’ terms and conditions for its reward program spell out the expiration period for its “free drink or food item” rewards that are credited to a user’s account after certain requirements are satisfied. Prior to becoming an authorized user of the reward program, the user must agree to the expiration period set forth in Starbucks’ terms and conditions for the rewards.

Uber users similarly must agree to Uber’s terms of service prior to becoming an authorized user of its service. As of the date of the writing of this article, however, Uber’s terms of service do not appear to explicitly describe when and how its rates may change from its advertised rates or when free ride credits will expire. While there may be other ways in which Uber can approach the recent lawsuit, it is likely that early dismissal of the lawsuit based on its terms of service may have been possible had it included the foregoing rate and free ride credit terms.

All in all, it’s just another reminder that the going rate for an ounce of prevention remains a pound of cure.