Report: millions of Uber’s China rides are faked

A new report on Chinese tech site Tencent Tech suggests that millions of Uber’s booked rides in the country are fakes – fraudulent fares reported by drivers in order to collect Uber’s high driver subsidies.

Faking fares – which some drivers refer to as “acupuncture” – works like this: first, you buy an Uber driver account. There are plenty available for sale on sites like Taobao, and many even come with helpful “how to fake rides” guides. Once you’ve got your account, you partner up with a passenger using the consumer Uber app. With location services turned off, the passenger submits a fare from point A to point B. You drive the fare with no passenger, return the money paid by the passenger, and then split the driver subsidies Uber will pay you – which may be several times the price of the fare itself.

This “acupuncture” phenomenon it doesn’t only affect Uber. But drivers told Tencent Tech that because Uber’s subsidies are the highest, virtually all of the faking right now is taking place on Uber’s platform because it is the most profitable.

This isn’t new, of course, but what is new is the numbers. Tencent Tech found that on Taobao alone, there have been around 200,000 Uber driver accounts bought and sold. Assuming that each account is used for around 5 fake trips (which may be conservative), that’s a million faked Uber rides via Taobao alone. And according to the report, Taobao is not the largest source of Uber driver account purchases – far more are sold by phone or in QQ groups. All in all, it seems that millions of Chinese rides booked via Uber probably never happened.

Uber is aware of this behavior, of course, but it’s in a bit of a strange position. On the one hand, it is essentially being stolen from by “drivers” who aren’t actually taking passengers anywhere. But on the other hand, the increased rides count that all of these fake drivers provide helps bolster Uber’s China stats when it’s looking for investment – like it is right now. This week, the American company unveiled some rule tweaks aimed at controlling the situation, including changes to the subsidy system and how pickups work. It is also putting additional effort into banning fake accounts as it uncovers them, and Tencent’s report suggests that these efforts have led to a reduction in the number of fake drivers.

Uber reportedly does have the technological capability to shut down fake rides entirely, but is concerned that doing so would slow its genuine organic growth because being overly strict could result in false positives, banning real drivers and passengers who aren’t cheating the system.

(Source: Tencent Tech via Techweb)

UPDATE 6/24: It’s probably worth pointing out for those who don’t know that Tencent, which is Tencent Tech’s parent company, is invested in Uber competitor Didi Kuaidi.