By CCN: One of the earliest scams in the rideshare world was providing cars to drivers who didn’t have one or couldn’t afford one. It was particularly insidious early on because Uber was touting salaries of $96,000 a year for its drivers (which turned out to be nonsense). Yet the scam never really went away, and it continues to flourish as the Lyft Express Drive program.
The Great Lyft Driver Scam
The Lyft driver scam goes like this: a person is enticed to drive, having heard that they can earn good hourly pay and work on his own terms. This person doesn’t have a car, though.
Lyft oh-so-kindly offers its Express Drive plan in which the driver can rent a car with its partner Hertz for a mere $240 per week.
There’s a dirty little secret behind this Lyft driver scam, however. The company knows that drivers are financially unsophisticated and fail to do the proper expense calculations prior to entering indentured servitude for their rideshare masters.
Those expenses are much higher than anyone would expect. Gas, insurance, and rideshare commission already take a hefty chunk out of driver revenue. Yet the Lyft driver scam is even worse because the company pays Express Drive users less than other drivers.
Lyft’s Money-Losing Model
Why would they encourage drivers to rent through Express Drive? Because Lyft is a money-losing business that must subsidize every portion of its business in order to stay afloat.
Looking back to 2016, it becomes even more obvious why the Lyft driver scam must operate as it does.
Initially, Lyft partnered with GM for cars, which only cost drivers $99 per week. That program couldn’t survive and neither have any of the others. That’s because insurance costs have steadily increased as a result of the fact that Uber and Lyft drivers are not professionals – like taxicab operators are – and have a higher risk of accidents.
So the Lyft driver scam had to get into business with Hertz at much higher prices to keep the program alive.
Express Drive Is Just Another Scam
This reveals an even bigger problem with Lyft and Uber as well as their business models and lackluster stock performances. As early as 2015, studies indicated that Uber was experiencing a 45% attrition rate in drivers after only one year.
In order to maintain enough drivers to meet demand, Uber and Lyft had to move further down the desirability scale to people who didn’t have cars but needed jobs. Uber and Lyft had to get people into these cars. So they began trying different leasing and rental programs.
Yet that has been an ongoing problem because Uber and Lyft are in a price war, trying to undercut both each other and local taxis. This has pushed fares ever lower and driver take-home pay lower still.
That’s why all of these leasing and rental plans ultimately fail. Drivers can’t afford to keep the cars and they quit driving.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.