Uber Technologies Inc., the largest ride-hailing company in the world, may not be able to continue its quest to compete in a rapidly changing market after the US Federal Trade Commission accused it of “deceptive” business practices, including selling its drivers’ personal information to Uber.
The complaint was filed by the FTC on Monday against Uber Technologies and its affiliates, including Uber Technologies New York City Inc., Uber Technologies Los Angeles Inc., and Uber Technologies Houston Inc. The suit accuses Uber of marketing its ridesharing service by selling data to third-party companies, including companies such as a rival competitor, to enable Uber to market its service.
Uber Technologies and other Uber affiliates were accused of selling information on customers’ ride requests and the drivers’ data to a third-parties.
The FTC alleges that Uber Technologies sold personal information from the ridesharers, including name, address, and phone number, to a ride-sharing service that later sold the information to a company owned by Uber’s former CEO, Travis Kalanick.
The complaint also alleges that the rideshare service used drivers’ information for marketing purposes, including promoting Uber services to its customers.
The suit, filed by New York Attorney General Eric Schneiderman, says Uber “engaged in deceptive business practices in its sales of driver information and driver profiles, including by using the drivers and their personal information for promotional purposes.”
Uber is in a “virtual free fall,” the suit says, and has lost more than $1 billion in the last 12 months, including $300 million in the third quarter.
“We are deeply disappointed by the FTC’s allegations,” Uber’s Chief Financial Officer Joris Evers said in a statement.
“Our company’s commitment to fair and open competition is our number one priority and we stand ready to defend ourselves against the claims in the complaint.”
Uber’s business, which employs more than 500,000 people in the US, Europe, Asia, and Africa, grew about 5% year-on-year last year, according to a survey by research firm Gartner.
For the third year in a row, Uber’s operating profit fell short of Wall Street’s expectations, as its drivers lost their jobs, the company said.
While Uber’s loss of jobs has not hurt the company’s bottom line, it has made it more expensive to operate, and it has raised questions about whether the company will continue to expand its business, according a recent report by Reuters.
The lawsuit alleges that many of the rideshares that Uber uses are operated by Uber Technologies affiliates.
Uber Technologies also uses its own ride-booking system, UberX, for its drivers, which could make the company vulnerable to FTC claims, the complaint said.
Uber has denied any wrongdoing and said that it is cooperating with the FTC investigation.
It has said that the settlement agreement will give Uber a “reasonable time to evaluate the claims.”
Uber also said that if the company is found to have violated the law, the lawsuit will be dismissed and Uber will be allowed to operate in New York state.
Uber said that, “The company has not and will not sell, use or disclose the driver’s name or driver profile to any third party.”