Liability Exposure

Uber for Business: More Dangerous Than We Realized

Businesses are partnering with rideshare platforms to arrange transportation for customers and colleagues. But they're underestimating liability risks.
By: | December 1, 2018

There’s no arguing with the advantages of ridesharing over more traditional options like public transportation, taxis or contracted bus services. Convenient, clean and cost-effective, the Ubers and Lyfts of the world (deemed transportation network companies, or TNCs) are the primary way many people get from point A to point B.

Businesses and organizations recognize that, too and are increasingly partnering with rideshare platforms to offer the transportation service to customers and colleagues. However, risk managers could be underestimating the additional liability exposures created by these partnerships.

Despite their benefits, on-demand ride hailing apps may not be the best fit for every purpose. At the very least, organizations should consider how partnering with a rideshare platform impacts their liability exposure.

Cyber and Privacy Liability

“Protection of PII (personal identifiable information) is the nuance that doesn’t exist with other types of transportation,” said Thom Rickert, VP and emerging risk specialist at Trident Public Risk Solutions.

Thom Rickert, VP and emerging risk specialist at Trident Public Risk Solution

Integrating with a rideshare platform creates another point of entry into a company’s corporate network. This exposes confidential company data to theft and increases vulnerability to a malware attack.

In 2017, Uber launched a B2B platform — Uber for Business — designed to allow companies to manage rides taken by their employees or ordered for customers or partners. The program allows approved rides to be automatically charged to the company account and provides detailed records of who took the ride, to where and at what time. By linking directly to a corporate account, the platform exposes business users to direct financial theft.

According to an August 2017 report from cyber security firm Appthority, Uber updated its platform at the end of 2016 and did away with an encrypted connection to transmit data.

“It’s unclear why Uber removed SSL support and important to note that not using proper data encryption during network transmission may lead to man-in-the-middle attacks or the disclosure of important information to unintended parties,” the report said.

Companies partnering with rideshare platforms need to “review safety protocols that are built into the applications and understand how the transportation company maintains security of their own data,” Rickert said. That means knowing whether they manage PII themselves or outsource data storage and security to a third party. In either case, businesses should “determine whether the rideshare provider’s data protections align with their own expectations around how to handle PII.”

“The potential cyber liabilities for corporate accounts with TNCs are no different than for any other entity which has a legal obligation to protect its employees or clients’ personal identifiable information,” said Robley Moor, senior key account manager, Swiss Re Corporate Solutions.

“Also, a TNC account is a not an obvious ‘backdoor’ to a corporate server where employee data lives. If a TNC’s network security weakness is exploited to get available corporate customer data, their liability is probably clear.”

Liability for Bodily Injury

Neither Uber nor Lyft has a sparkling record when it comes to properly vetting its drivers. A 2018 CNN investigation found that in the past four years, at least 103 Uber drivers and 18 Lyft drivers in the U.S. have been accused of sexually assaulting or abusing passengers.

Each company conducts criminal background checks on drivers, but it’s not known how extensive or thorough they are.

Ann Myhr, senior director, Knowledge Resources, The Institutes

“Laws and regulations around driver certification vary based on municipality, state, etc.,” said Ann Myhr, senior director, Knowledge Resources, The Institutes.

Business users have no control over the vetting process. This applies not just to a driver’s criminal history but also his or her behavior behind the wheel. This is where contractual review becomes critical.

“Read the terms of service. What is the rideshare company obligated to do when it comes to screening drivers and ensuring safety? What are your obligations as the user? What are the consequences when obligations are broken; where does the liability fall? There has to be a level of verification, validation and consistent monitoring to make sure the terms of that contract are being fulfilled,” Rickert said.

If an employee-passenger picked up for a business-related ride gets injured, they may include their employer in a lawsuit along with the transportation company, alleging that the employer was negligent in its selection of a vendor with unsafe hiring practices, thus exposing riders to risk.

Most states require rideshare providers to carry $1 million in auto liability limits, but where regulations are unclear, or if damages exceed that amount, employers dragged into a lawsuit could have a hard time finding recovery.

“Most personal auto policies specifically exclude livery exposures and do not provide coverage for carrying passengers for a fee,” Myhr said.

“Even when TNCs provide commercial auto coverage, there are always potential gaps between the commercial policy and personal policy. And coverage limits for personal policies are generally much lower than for commercial policies.”

“In a bad accident, plaintiffs will look to attach liability to the deepest pockets available, which means the TNCs or the employer/arranger,” Moor said.

Workers’ Compensation

If an employee is attacked or otherwise injured during a ride arranged through their employer, they may be entitled to workers’ comp benefits.

Robley Moor, senior key account manager, Swiss Re Corporate Solutions

Some states’ “coming and going” rules bar compensation for injuries incurred while driving to or from work, but the fact that the car in question was arranged via a company-sponsored transportation platform could alter the equation.

“The law always lags behind technology,” Moor said.

“Courts have not yet considered the issue of workers’ compensation claims or tort liability for a company ‘arranging the use’ of a ridesharing service by others. ”

According to a June 2018 article in The Legal Intelligencer, three exceptions to the coming and going rule include:

  1. The employment contract includes transportation to and from work.
  2. The claimant is on a “special assignment or mission” for the employer; or
  3. Special circumstances are such that the claimant was furthering the business of the employer.

If a court decides that these exceptions apply and such claims are deemed compensable, that will increase the workers’ comp exposure. &

Katie Dwyer is a freelance editor and writer based out of Philadelphia. She can be reached at [email protected].

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