Uber's Rise In China May Be Counterfeit 86
retroworks writes: Josh Horwitz' story in Quartz reports both the apparent rapid success of Uber adaptation in China, and a queasy footnote for shareholders applauding the rapid growth. While China is a natural ride-sharing haven, it also has a tradition of gaming the western system. From the story: "Accomplices can sit in their apartments, disable location settings, and specify a pickup not far from the actual location of driver's vehicle, the report said. The driver then accepts the hail, and goes on a trip without a passenger. After the accomplice approves payment, the driver will – hopefully – pay back the fee and share a cut of the bonus. It's not the most clever get-rich scheme on the planet. But for drivers, it's better than waiting for a hail in a parking lot." Uber's spokeswoman told the Quartz writer that the company has an on-the-ground team who investigate into these various type of fraud, then uses "deep analytics, and new tools developed by our Chinese engineers in our dedicated fraud team to combat against such fraud." The Uber spokeswoman declined to elaborate on the nature of these tools.
Trying to figure out how this works... (Score:5, Insightful)
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Free rides and bonuses, that are funded from the service charges.
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Re:Trying to figure out how this works... (Score:5, Insightful)
I received a $30 credit from Uber when I installed the app. That's free money. However, Uber only lets me spend it on my first Uber ride. So I can't just put that $30 into my bank account. In my case, it was raining one day, and I didn't have an umbrella, so I called an uber and got a short ride home. It came to $8, which used up my $30 credit. I didn't cleverly hatch a scheme with the driver.
If I were in China, I could say, hey, dude, bill me $30, it's coming off my new user credit anyways. Then give me $10. The driver makes $20 instead of $8, and I make $10 instead of $0. The loser would be Uber. Now, if I were to make a criminal enterprise out of it, I could say, hey, why even get a $8 ride? Let's have NO rides, and just keep billing $30 to get that juicy new user credit! We'll get keyboard farms to keep creating new uber accounts and riding and get that sweet $30 snatch!
Now, in the U.S., Uber stops me from creating new accounts on my own to take that $30 repeatedly because it requires a credit card. Now, if I were savvy, I'd use a new credit card with a cousin's billing address on a wiped phone and create a new uber account. If I have 12 credit cards and 12 cousins, I could register 12 new accounts. The only overlap would be my name, but Uber has zero way of telling if two John Smiths with different credit card numbers and different billing addresses could possibly be the same person. They rely on the fact that no one cares so much about $30 to bother with wiping their phone, swapping in a new sim card, using a new card and a cousin's address. And, they're right, in the U.S. In China, people will go through a lot more hardship for less. Clickfarms in China pay something like 10 cents per hour.
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I received a $30 credit from Uber when I installed the app. That's free money. However, Uber only lets me spend it on my first Uber ride. So I can't just put that $30 into my bank account. In my case, it was raining one day, and I didn't have an umbrella, so I called an uber and got a short ride home. It came to $8, which used up my $30 credit. I didn't cleverly hatch a scheme with the driver.
If I were in China, I could say, hey, dude, bill me $30, it's coming off my new user credit anyways. Then give me $10. The driver makes $20 instead of $8, and I make $10 instead of $0. The loser would be Uber. Now, if I were to make a criminal enterprise out of it, I could say, hey, why even get a $8 ride? Let's have NO rides, and just keep billing $30 to get that juicy new user credit! We'll get keyboard farms to keep creating new uber accounts and riding and get that sweet $30 snatch!
Now, in the U.S., Uber stops me from creating new accounts on my own to take that $30 repeatedly because it requires a credit card. Now, if I were savvy, I'd use a new credit card with a cousin's billing address on a wiped phone and create a new uber account. If I have 12 credit cards and 12 cousins, I could register 12 new accounts. The only overlap would be my name, but Uber has zero way of telling if two John Smiths with different credit card numbers and different billing addresses could possibly be the same person. They rely on the fact that no one cares so much about $30 to bother with wiping their phone, swapping in a new sim card, using a new card and a cousin's address. And, they're right, in the U.S. In China, people will go through a lot more hardship for less. Clickfarms in China pay something like 10 cents per hour.
Yea, and then the most hilarious part is:
Uber's spokeswoman told the Quartz writer that the company has an on-the-ground team who investigate into these various type of fraud, then uses "deep analytics, and new tools developed by our Chinese engineers in our dedicated fraud team to combat against such fraud." The Uber spokeswoman declined to elaborate on the nature of these tools.
So they are bragging about how smart they are for thwarting the scammers with "Deep analytics" whatever the hell that means. If you were smart enough to do "Deep analytics" should you also have been smart enough to design a system that wasn't so easily scammed? I dunno... like you don't get your payout for 3 months or something? or your payout's in the form of an Amazon Gift card that you can only use from your Uber account? There's about 100 different trivial ways t
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Okay, but at some point Uber has to make money, and at that point, it is then a net loss for the driver and his co-conspirator.
If that's not the case, then that is what is wrong with Uber's business model, and a problem that is easily fixed.
Re:Trying to figure out how this works... (Score:5, Interesting)
Okay, but at some point Uber has to make money, and at that point, it is then a net loss for the driver and his co-conspirator.
At some point Uber has to make money, but that point may be off in the future somewhere. WARNING: I READ TFA. Uber is paying "new driver" bonuses. So the driver signs up for an account, does enough fake rides to earn the bonus, then still has enough to make a profit even after paying both Uber and the accomplice. Then they create another Uber account with another name, and do it again.
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Well, don't forget they've given themselves permission to access your data, spam you and your contacts, and track your location constantly.
I'm sure that was always part of the end-game for profits.
Because tracking, analytics, and ads are always part of the end-game.
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at some point Uber has to make money
They'll make it up in volume.
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What bonuses and service charges? If I take a ride and it costs me $10, I know that my driver gets $7.20 and Uber takes $2.80. I'm already out $10, how are we both going to earn a profit by splitting $7.20?
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Using made up numbers, You pay Uber $10. Uber takes $2.80, but gives back a $5 bonus incentive for being a new driver. The driver returns the $10 to the customer/accomplice plus 1/2 of what's left. The accomplice makes $1.60 and the driver makes $1.60 and Uber is out $3.20 (or more if you account for other overhead)
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Uber effectively pays this much:
$5 - 2.80 = $2.20.
So driver and accomplice make $2.20/2 = $1.40 each.
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Uber effectively pays this much:
$5 - 2.80 = $2.20.
So driver and accomplice make $2.20/2 = $1.10 each.
FTFY
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Uber effectively pays this much: $5 - 2.80 = $2.20. So driver and accomplice make $2.20/2 = $1.10 each.
FTFY
Math is hard. Let's drive cars!
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Re:Trying to figure out how this works... (Score:5, Interesting)
Uber is giving out free money to get people to use the service
I have lived and worked in China. If there is any way to game a market, the Chinese will figure out how to do it. When BAT (British American Tobacco) first entered the Chinese market, they were surprised to see sales higher than expected. Sales continued to grow for several months, and they ramped up production. Then, after six months, sales plummeted to zero, and never recovered. They took huge losses on infrastructure and unsold merchandise.
It took them a long time to figure out what happened. Their sales were high because their products were being purchased by their competitors, and stored in damp warehouses, where they grew stale and moldy. Then after six months, all the accumulated rotten cigarettes were dumped onto the wholesale market, crashing the price, and destroying BAT's reputation for quality.
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It took them a long time to figure out what happened. Their sales were high because their products were being purchased by their competitors, and stored in damp warehouses, where they grew stale and moldy. Then after six months, all the accumulated rotten cigarettes were dumped onto the wholesale market --
Along with a free copy of the runaway best-seller, Who's Got The Monkey [thedailywtf.com].
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yup. whatever can be exploited will be exploited; and not even extremely "not worth it" gains will stop them from doing so. In a country like China there's always some sucker who'll do whatever shit job for next to no pay.
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Stolen credit cards?
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Basically, it works like this:
They Chinese. They play joke. They pee pee in Uber's coke.
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Re:Trying to figure out how this works... (Score:5, Informative)
By one account, Uber was handing drivers 300 yuan (about US$50) for every 30 trips and 400 yuan for every 40.
Seems like they need to add other metrics into their bonus system, like a minimum fare required to count towards the bonus.
So, it's credit card fraud (Score:2, Insightful)
What else is new?
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Fraud is not the main thing here.
Uber is paying cab riders bonuses that make riding without passengers profitable. So, they ride without passengers and collect bonuses. Their using fake ids or other illegal is just incidental. Uber itself is probably operating illegally, and nobody cares about that.
China, the yellow scourge (Score:3, Interesting)
Granted, the story will 'sell more papers' than a similar story about Uber being defrauded by teenage stoners from Kansas. China is a competing economic power with the US and EU, and as a result it seems to being demonized because Chinese people didn't have the common sense to be born with white skin. This constant barrage of stories about 'Chinese' dishonesty paints an image of them as being inscrutable and untrustworthy as a race.
Re:China, the yellow scourge (Score:5, Insightful)
There is an implicit racism in all these stories that hit the media decrying 'Chinese Fraud and Duplicity'.
That's you looking for racism. If Uber is so desperate for growth that a driver can make money by driving his wife around the block all day, especially if he doesn't actually drive her but has a coffee with her or something that slashdot users wouldn't comprehend, then people will take advantage of that. In every country. And Uber fully deserves it.
Because in the end these drivers make a few Yuan, while Uber fraudulently makes billions of dollars by pretending to investors that they have genuine growth, when this is only due to losing money on every trip made.
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I also strongly suspect they'd have exactly the same problem if they offered the same bonus structure in the US. Except the headline would be something about hacker ingenuity.
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I also strongly suspect they'd have exactly the same problem if they offered the same bonus structure in the US. Except the headline would be something about hacker ingenuity.
Or whatever you want to call it [xkcd.com].
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While there might be a problem with fraud in Uber use in China, is it any worse than in any other country? There is an implicit racism in all these stories that hit the media decrying 'Chinese Fraud and Duplicity'. I am sure there is plenty, as totalitarian governments have been shown to increase dishonesty in their populations, but is it really worse than any other developing country or country lacking a government? Granted, the story will 'sell more papers' than a similar story about Uber being defrauded by teenage stoners from Kansas. China is a competing economic power with the US and EU, and as a result it seems to being demonized because Chinese people didn't have the common sense to be born with white skin. This constant barrage of stories about 'Chinese' dishonesty paints an image of them as being inscrutable and untrustworthy as a race.
Chinese people may not be universally unscrupulous, but it is definitely a lot more common than in other countries. When is the last time a German or Australian was at a trade show and wasted a competitor's time, asking questions that are obviously related to copying their business, taking detailed notes, and photos of everything? I have never seen it happen or witness such a thing. But without fail, at every trade show I go to, there are several Chinese delegations who go around doing this to every b
Re: China, the yellow scourge (Score:3, Interesting)
It is a cultural thing. Chinese are educated by copying others and have done so for centuries. They are awesome at testing with high scores in any schooling system and field (math, physics etc) because testing is simply copying the answer. But having them apply what they've learned is (generally) not feasible.
It is culturally engrained and encouraged from birth, to them it is not immoral to do so which is reflected in their legal system (lack of copyright and patents enforcement).
Copyright and patenting is
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It is a cultural thing. Chinese are educated by copying others and have done so for centuries. They are awesome at testing with high scores in any schooling system and field (math, physics etc) because testing is simply copying the answer. But having them apply what they've learned is (generally) not feasible.
Chinese R&D (Remember and Duplicate).
Jokes aside, whilst a lot of Chinese educational institutions are set up for rote memorisation (this is the same across most of Asia) China still manages to produce quite a few people capable of creative and independent thought. Typically these people try to get into western universities where degrees have a good value. The sad thing is, a lot of the rote memorisation crowd are trying to do the same thing for the same reason.
You get geniuses and idiots in all c
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but china is not a developing country, nor is it lacking a government.
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I don't have the necessary data to say if the Chinese are or aren't more unscruplous(or, as an intermediate possibility, have a different distribution of unscruplousness, so westerners are surprised to be shivved in the back by manufacturing managers rather than financial services assholes, say)
I think this is the key point - many throughout the world and throughout history would be shocked at the Gordon gecko-like avariciousness of demolishing a company to sell the bricks in the wall, or bankrupting an entire country in order to profit off the spread, or other acts that we consider not just "just" but also "necessary for a functioning economy."
if another culture is applying the same maxims in different areas of business where we are used to a more collaborative or respectful approach, then maybe
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While there might be a problem with fraud in Uber use in China, is it any worse than in any other country? There is an implicit racism in all these stories that hit the media decrying 'Chinese Fraud and Duplicity'. I am sure there is plenty, as totalitarian governments have been shown to increase dishonesty in their populations, but is it really worse than any other developing country or country lacking a government?
Granted, the story will 'sell more papers' than a similar story about Uber being defrauded by teenage stoners from Kansas. China is a competing economic power with the US and EU, and as a result it seems to being demonized because Chinese people didn't have the common sense to be born with white skin. This constant barrage of stories about 'Chinese' dishonesty paints an image of them as being inscrutable and untrustworthy as a race.
Think of it as a Prisoners Dilemma applied to a market economy. The Prisoners Dilemma generally means people cooperate within their group (optimal with repeated interactions) but defect with outsiders (optimal for 1-off interactions).
The West has had market economies for a very long time, we've figured that cooperating even with strangers is the best strategy at a cultural level so as a culture we've put in a lot of effort into telling people they should conduct business honestly even with strangers and not
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1 Denmark
2 New Zealand
3 Finland
7 Singapore
10 Canada
11 Australia
15 Japan
17 USA
55 Saudi Arabia
85 India
100 China
Perhaps racism is not the driver; perhaps the driver is a culture that facilitates corruption.
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Keep in mind that Singapore has the exact same racial majority as China, and they don't get these kind of stories.
What's happening is you've got a uniquely Chinese cultural and social systems that is adapting to (and in many case outright adopting) the Western business models that are the only way you can successfully run an economy. Historically the country has had huge problems because historically Han culture has emphasized getting the best one can out of the system with virtually no regard as to the hea
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Uber has virtually no presence in China, it is being eaten alive by local competitor "Didi" who uses almost the exact same business model, but is actually able to find customers and drivers.
Uber is like "China is a big market, we must go there", but in reality, they have no idea of the realities of doing business here. They will drop huge amounts of money on advertising which will be seen by no one because they don't know how to get the word out here. Nobody in China knows Uber, nobody talks about Uber, but
Desperate for growth? (Score:5, Insightful)
This reminds of a story from the former German Democratic Republic, where the prices for apples (the fruit, not the fruity computers) were so much subsidised that farmers delivered their apple harvest to the state, then bought up as many apples as they could in the stores at subsidised prices, and sold them again to the state as freshly harvested?
Wow... (Score:4, Funny)
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so the purveyors of unlicensed, unregulated public transportation services by potentially non directly employed third party contractors not required to submit to drug or background checks is complaining their service, which has been banned in spain, thailand, india and briefly germany, is being bilked for incentive payments in a country with markets for such exotiques as recycled cooking oil rendered from waste food. I guess the best solution could be to stop running an unregulated, unlicensed transit network thats been charged of raping and assaulting passengers in the past...or i guess just try another country and see if the idea of ayn rand on wheels works any better.
Regardless of your obvious bias against Uber, if said non directly employed third parties and/or passengers enter into agreements (e.g., TOS, etc.) and then purposefully violate said agreements, Uber is justified in trying to combat said violations.
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Regardless of your obvious bias against Uber, if said non directly employed third parties and/or passengers enter into agreements (e.g., TOS, etc.) and then purposefully violate said agreements, Uber is justified in trying to combat said violations.
the gp isn't arguing against uber trying to combat the fraud. s/he's only suggesting that we all tamp down on the moral outrage, especially considering that uber itself has been known for its rapacious practices/"disruption".
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I guess the best solution could be to stop running an unregulated, unlicensed transit network thats been charged of raping and assaulting passengers in the past..
...as opposed to the regulated, licensed transit network that's been charge of raping and assaulting passengers in the past and present.
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Not all taxis are like those where you are from...
A goodly percentage of them are, and anyway, look at the top of your browser window right now to see what we're talking about. HTH, HAND.
About Those Tools (Score:2)
"The Uber spokeswoman declined to elaborate on the nature of these tools."
Does it include a call to my cousin Vinny in Joisey?
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'Strayan here (Score:2)
Is he a yoot?
Its called a "ute" [wikipedia.org]
Deep Analytics? A waste. (Score:2)
Just use a fare meter...... duh..... they are taking a simple problem and making it more complicated.
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I can't say about China, but:
1. The fare meter wouldn't help if the 'problem' is that the driver is taking 'fake' fairs and still driving in order to 'satisfy' the fare. Remember, the GPS system tracks the drivers much more closely than a meter would.
2. Can't say about Chinese law(ergo, there's probably nothing against it, they're actually less regulated than the USA is), but I know that in the USA and England that in many spots having a taximeter is actually illegal unless you're a taxi, and they don't
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1) The bonus must be less than the actual cost of driving.
2) They are a taxi service on a global scale with centralized control and dictated fares. They are discovering the risks of trying to skirt the law. Believe it or not, being a registered taxi service and running it as one could actually benefit Uber.
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Believe it or not, being a registered taxi service and running it as one could actually benefit Uber.
That depends on the market. While being a registered taxi service might benefit them in some areas(and they actually are in some areas), in others being so merely runs them up against existing taxi companies that have twisted the markets to protect themselves - medallions, work requirements, method of operation, what they're allowed to charge*, etc... Some of the requirements are good, others are just to help insure that a new business doesn't come along and put the old taxi companies out of theirs.
Basica
Chinese Joke (Score:1)
Me play ancient Chinese joke, me use Uber without a bloke.
Same here in India (Score:1)
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Amazingly simple and effective.
The investors for these companies are fucking retarded. The companies need to be taking a cut of each fare, not giving a bonus that puts them in the red for each ride, thus making this type of scam possible.
Deep Analytics (Score:3)
Bullshit: "deep analytics, and new tools developed by our Chinese engineers in our dedicated fraud team to combat against such fraud."
Truth: "We just found out about this and have no idea what we can do to stop it because our entire business model is based on customers claiming they need a ride then claiming they got a ride, and drivers claiming they received payment. We're a middleman that does nothing other than point customers to an unregulated fleet of drivers so we have no idea what is actually going on. If we were taking a cut of each ride payment this scam wouldn't exist, but we have to bleed money by incentivizing drivers with bonuses in order to maintain a public image and keep our name in the news. This allows scammers to fake the ride and fee and share the bonus. We might be able to catch a few of the worst and dumbest offenders by looking at the top bonus earners and their passengers, but that money is long gone and we won't switch to a sustainable model until the last investors left holding the bag demand it."
Not a very smart fraud if true (Score:2)
This isn't a very smart fraud if it's true. The odds are the wear and tear cost on the vehicle FAR exceeds the value of the bonus.
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This isn't a very smart fraud if it's true. The odds are the wear and tear cost on the vehicle FAR exceeds the value of the bonus.
The thing is, at least in western countries, that there's currently no shortage of starry-eyed suckers who have been enamoured by the Uber propaganda so they can afford to churn and burn. As people slowly figure out that they're not making money after the costs of running the vehicle or find their insurance wont pay out after an accident Uber can afford to dump them because there are still 2 others willing to take their place.
This wont last forever, eventually enough people will figure it out so all they
The long con (Score:2)
"deep analytics, and new tools developed by our Chinese engineers in our dedicated fraud team to combat against such fraud."
The fraud committed by the chinese shill uber customers and drivers is just a decoy. The real con is by the "chinese engineers" being paid by uber to counter the fraud. They are actually a team of hackers working to steal uber's source code and sell it to a startup chinese version of uber.
Uber is not ride sharing (Score:2)