When the car-service network Uber debuted four years ago, the San Francisco-based company became an urban phenomenon, picking up executives burning the midnight oil or ferrying millennials to clubs and restaurants. It spread to New York City a year later and it now operates in more than 30 countries. In the process, Uber has entered the ranks of business disrupters, roiling taxi and limousine operators, and prompting a cabbie strike in London in May.
Uber is trying to make its business model work in the less densely populated suburbs. The car-service network started operating in the north New Jersey environs about six months ago. It is recruiting drivers on craigslist and luring passengers, mainly by word-of-mouth.
Take Fort Lee High School student Michael Zhadanovsky. When his mother couldn’t pick him up after school during the spring, sometimes he walked the mile or so to his house. But if the weather was bad, or he didn’t feel like walking, he went to his iPhone and there were five or six Uber drivers cruising in the neighborhood, he said. The app lets him see their locations on his phone. He paid $14 to $20 for the rides. “It’s not cheap, but it’s convenient,” said Zhadanovsky, 17, who learned about the service from his older brother, who lives in Washington D.C.
Once an Uber customer downloads the app and enters a credit card number, the customer simply touches a button on his or her phone, and within seconds sees the locations of Uber vehicles in the area. Customers can punch in a destination and get an advance estimate of the fare.
Riders receive a text confirmation when their ride request is accepted, and pickup is in less than 10 minutes on average, Uber says. The fare is charged to the card, tip included.
Not always popular
While the introduction of Uber’s UberX ride-sharing service in New Jersey in November found customers among airport-bound travelers and young people without cars, it also attracted the immediate attention of the Limousine Association of New Jersey, which made lobbying against it a top priority.
“We recognize that it’s a new era. But there are people being picked up in personal vehicles, and they do not have commercial insurance,” said Jeff Shanker, the executive vice president of A-1 Limousine in Princeton, N.J., and the vice president of legislative affairs for the trade group
The 85-member association has been urging the state to take action against Uber and its drivers, and has lobbied for legislation that would subject it to the same regulations that govern limousine operators. The measure would require ride-sharing drivers to have chauffeur licenses, chauffer plates and $1.5 million in liability coverage for bodily injury and property damage, or face fines of up to $2,500 for a first offense. The drivers would have to get criminal background checks through the state police.
UberX drivers can qualify if they are 21 years old, have a personal driver’s license and auto insurance , and if their car is a mid- or full-size four-door passenger vehicle “in excellent condition,” the company says on its Web page where drivers sign up.
Uber, which did not respond to repeated requests for comment, claims on its website that its insurance is “best in class” and it does “rigorous” criminal background checks of its drivers, through county, federal and “multistate” records. The company says it has purchased commercial liability insurance that supplements UberX drivers’ personal policies.
The company says on its website that its service is cheaper than a taxi fare, on average. Uber fares are based in part on demand and can vary quite a bit. The company has been accused by customers of price gouging during peak demand.
The company polices driver behavior in part through a rating system. Riders can rate their drivers on a scale of one through five, and drivers can rate their passengers.
Passenger ratings are a safety feature for drivers, said an UberX driver from Washington Township, N.J., who goes by the name of “Sem.” Riders who behave badly or are drunk and obnoxious get bad ratings, and drivers can avoid them.