May 9, 2016
Technology put the San Francisco companies on consumers’ radar — and smartphone screens. Technology matches drivers with riders, enabling carpools and lowering trip costs. And technology enabled them to disrupt the old (the taxi industry) and usher in the new (the controversial “gig economy”).
Yet neither company seems interested in looking to technology to solve a new problem vexing their business: legislation in Austin, Texas, that requires Uber and Lyft to fingerprint drivers as part of the background check process.
Instead of trying to engineer a technological solution, both companies ceased operations in the city as the law took effect Monday morning. Here’s why.
Uber and Lyft argue that fingerprinting is burdensome for drivers because they would have to go to an approved location such as city hall or a police station before they can drive.
And although there could be a future where Uber and Lyft gain approval to use Live Scan — a device that electronically captures fingerprints and sends them to an FBI database — that seems unlikely.
First, it wouldn’t come cheap. Live Scan background checks can cost up to $100. Uber and Lyft have argued that costly background checks can be prohibitive to many of its drivers.
And although any company can buy a Live Scan device, that doesn’t mean it will get permission to connect to the FBI’s database.
“It’s difficult — there’s always a vetting process that takes place if you want to be able to connect to the FBI,” said Charles Carroll, senior vice president of the enrollment services division at MorphoTrust, a firm that captures fingerprints using Live Scan and operates the TSA PreCheck program.
According to Carroll, the FBI approves certain industries and allows them to submit fingerprints to its databases. States and cities have access. So do the banking and insurance industries and third-party vendors. If Uber and Lyft wanted to band together and push to be included, they could certainly try.
“But that would be very expensive and time-consuming,” Carroll said. “It’s not impossible, but it’s rare for industries to be able to connect directly with the FBI. They would probably have to get political and congressional support as well.”
An alternative would be to partner with a firm such as MorphoTrust that the FBI has already approved, but that doesn’t eliminate the issue of cost.
An Uber spokeswoman told The Times that the company is not working on a technology that would make it easier for the company to work with Live Scan. Lyft did not respond to requests for comment.
Tech companies probably could come up with a way to remove some of the pain points of fingerprint-based background checks — say inputting a print through a smartphone app. But that would also be missing the point, said Raj Ananthanpillai, chief executive of Identrix, a company that offers continuous background screening services.
“That is an old way of thinking,” said Ananthanpillai, who doesn’t believe fingerprinting is necessary to identify a person.
Instead, if a company is going to develop technology to bolster its safety and security, he believes it should work on technology that can monitor drivers’ behavior while they’re behind the wheel. Just because drivers have a clean record before they start driving doesn’t mean it will stay that way, he said.
“Ninety percent of companies do background checks and then forget about it,” Ananthanpillai said. “You want to be able to catch people proactively. So if a driver got arrested last night for a DUI, you want technology that will notify you right away, instead of waiting weeks for the government to update its database.”
For its part, Uber has invested in biometric technology that it plans to roll out across the U.S. The company is testing facial recognition technology in 18 cities, where drivers are periodically required to take a selfie to ensure that the person behind the wheel matches the driver’s official Uber profile photo.
The company also continues to push its “holistic approach” to safety, reminding regulators and customers that the Uber app gives passengers access to the driver’s name, number plate, route traveled, and the company’s rating system.
Still, citing fingerprinted background checks as “the gold standard,” Carroll said he isn’t convinced. And after this last weekend’s ballot measure, neither are 56% of Austin voters.
When Houston implemented a similar measure last year, Lyft immediately pulled out of the market, but Uber stuck around. Under Houston’s rules, drivers could undergo Uber’s background check process and, if they passed, they could drive for Uber for 30 days, after which they had to get fingerprinted.
An Uber spokeswoman said driver numbers fell off after the 30-day mark, and customers in Houston now wait an average of 35% longer for a ride than they did in Austin. The company is considering withdrawing from the city.
The takeaway was clear, according to Uber. Adding fingerprint background checks diminished driver numbers and slowed growth — a big no-no for companies such as Uber and Lyft, whose rapid growth is paramount to their multibillion-dollar valuations.
“We have to take a stand for a long-term path forward that lets ride sharing continue to grow across the country,” a Lyft spokeswoman said in a prepared statement this last weekend.
After Uber and Lyft failed to win over Austin voters — despite a $8.7-million campaign — the companies packed up shop rather than operating under a new paradigm.
That’s because they don’t want other cities to think they might bend to similar laws.
The Austin shutdown is a political move as much as it’s a practical one, preemptively giving local regulators who are considering similar ballot measures a warning: It’s Uber and Lyft’s way or the highway.