Since ride hailing apps like Uber are continuing to subsidize drivers and users to get a larger market share, professional fraudsters have started to pocket money from the platform by taking advantage of the system.
Recently, police in Hangzhou city cracked a scam in which two Uber drivers registered 5,000 fake rider and driver accounts to fabricate travel histories, swindling the ride hailing platform Uber out of RMB 140,000 (USD 21,588), reported Xinhua News Agency on Friday.
Uber offers a set of incentives for its drivers by rewarding those who complete a certain amount of orders or accept orders during peak times. Driven by high rewards, a business chain to take advantage of this system was stealthily formed. Xinhua reported that deals are made through QQ and WeChat group chat rooms, through which Uber drivers can contact teams of “professionals” for paid services to fake order records.
So how do they do it? First let’s see how an order is made on Uber.
On the Uber app, users drop the pin on any location on the map and the driver will pick up the rider at that location. Upon arrival, a fee determined by the distance traveled will automatically be deducted from the user’s account.
Fraudsters take advantage of the loopholes in this process to create thousands of ways to trick Uber with fake orders. In the jargon used by fraudsters, faking an order is called “giving an injection”, which comes from the action of dropping a pin on the map. Thus, drivers are the “patients” and the fake riders are “nurses”.
A driver can call for an “injection” service by sending out his location to the “nurse”, who makes an order from this location. The driver then accepts the order. After the order has been completed, he returns the fare to the shadow rider and gives them a certain amount of commission. The driver thus accumulates another order record in his account and gets his subsidy from Uber.
This is the simplest way of faking an order. On other occasions, the “nurse” can even locate the driver and fake travel records by tricking the app. It was reported that an average fraudster’s team owns more than 30,000 Uber user accounts.
Another common practice among Uber drivers is to fake orders themselves using several phones. By installing one phone with the Uber driver app and logging onto a user account on the other, orders can be made without the help of a third party.
Other kinds of businesses have emerged to feed this growing industry, including selling new user accounts, new driver accounts and specially-made cell phones that can log into several user accounts. There are even tutorials on how to fake orders.
Uber is not alone in the fight against fake orders. Its rival Didi Kuadi, China’s largest ride-hailing app, is a victim, too. At the end of February, a Didi driver was convicted by a local court in Beijing for creating fake orders to earn more than RMB 10,000.
These scams may continue as long as these tech giants continue to subsidize customers. And there are consequences.
Didi Kuaidi said earlier that Uber uses as much as USD 1.5 billion to subsidize Chinese users in a response to Travis Kalanick’s accusations that Didi is burning huge amounts of cash on subsidies. According to him, Uber is filling its losses in China with profits from overseas markets.
(Top photo from M.tripvivid.com)