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- Uber to introduce a loan program to give drivers access to financial services
- Loan program to give drivers access to short term credit of up to $500 or more
- This form of payday loan program could exploit workers pushing them to work long hours to repay the loan
Ride-hailing company Uber has been quietly developing a payday loans program for its drivers. However, this program could potentially trap the drivers in debt cycles and thus leaving them vulnerable for Uber to exploit. The loan program is synonymous with exploitative payday loans. This comes as the FCA continues to tighten regulations of payday loans lenders with some going bust recently.
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Uber to introduce payday loans program
Uber notified drivers in the US in early September about the development of the payday loans program. The company informed the drivers that it was developing a financial product that could help them in times of need.
It appears the loan program of Uber is no different from payday loans. Through the program, the company will be lending drivers short term loans of up to $500 or more. With the company advancing the loan to drivers it means they will have to driver more to repay the debt. So far the company has rolled out the loan program in Brazil, Peru, and India. However, it has not unveiled the same in the US and Uber has not offered more details regarding the program.
Loan program could push drivers to peonage
It, however, seems like the loans are part of Uber’s broader push to give the driver access to financial products. The company through its Uber Money subsidiary wants to offer drivers access to credit cards and bank accounts.
Although details of the terms of the Uber loans are not public critics feel that they could exploit drivers. This is because of the company’s business model and its history of exploiting its employees. Equally, in recent times the company has been facing financial pressures meaning that the company wants to make more money. As a result, there are concerns that the company might create a new digital peonage through the loan program.
Uber has a culture of exploiting workers
The loan program may look appealing on the surface but it could end up just like Uber’s vehicle financing program. Uber exploited drivers through the vehicle financing program making it impossible for them to repay the car loan. The drivers earned less than what the company had promised them as the black box algorithm whittled their hourly wages. They subjected the drivers to high-interest rates and leases than expected. Last year the Federal Trade Commission fined the company $20 million for misleading the drivers on the auto loan.
According to Uber Money, they want to offer drivers financial services they cannot get. However, this payday loans program and the credit and debit cards targeted on the economically disenfranchised could be exploitative. This is predatory inclusion which is a way of exploiting drivers and making them work long hours to repay the loan.
Rebecca White is chief editor at CreditRaters.com. Rebecca has an extensive amount of knowledge on financial subjects including short-term loans & debt consolidation in the UK and USA. Rebecca has wrote for many publishers such as Debt Secret, My Money, VL and more.