Uber Car Drivers Options from Uber Lease to own to Uber Car Rentals.

Uber Car Created the global Ride Sharing $100 billion taxi market, achieving a Company valuation of nearly $70 billion, with an app that makes getting a cab with a touch of a button. But Uber Car still struggles to recruit and retain the more than 1.5 million drivers worldwide who make Ubers business possible.

The auto dealers Uber car partners with target people with poor credit or no credit who otherwise might not be able to buy a car or get a loan. It has attracted them with hefty signup bonuses and the promise of good pay, then cut rates and increased its own commission. It has advertised “being your own boss” but glossed over the fact that independent contractors don’t get benefits or a guaranteed minimum wage. Uber has been sued repeatedly by drivers who allege they were misclassified as contractors rather than employees. It settled with the US Federal Trade Commission earlier this year for misleading drivers about their potential earnings. It paid back tens of millions of dollars to drivers in New York City in May after admitting it for years shortchanged them on wages.

In recent months, Uber’s treatment of drivers has been almost completely forgotten amid a series of internal scandals. The company has lost nearly a dozen top executives so far this year, including founder and CEO Travis Kalanick, following multiple allegations of sexual harassment and workplace misconduct. It fired more than 20 employees as the result of a harassment probe in early June. Kalanick stepped down on June 20 after five major shareholders demanded his immediate resignation. He has retained a seat on Uber’s board of directors and still has his hands on the day to day operations of Uber Car.

Uber Car has turned to its drivers, and launched a campaign to improve the driver experience, titled “180 Days of Change.” But some of its past practices towards those drivers might be difficult to untangle.

In July 2015, Uber car launched its Xchange Leasing subsidiary to finance Uber leases and Uber rentals for drivers in the US with poor or no credit. The program has been criticized for its sky-high terms and potential for taking advantage of workers, though Uber Car said it was designed to streamline and improve financing options for drivers. Just two years later, Xchange has yet to become available in New York, one of Uber’s oldest, largest, and most profitable markets. Instead, the company has maintained partnerships with a small network of third parties Uber Car leasing Companies that predate its Uber leasing subsidiary, and which operate in the underbelly of New York’s auto-financing market, without much scrutiny.These Uber Lease Companies must also provide Uber Car Rentals to offer Uber car drivers only on work visa's a chance to make money for Uber Car.

Now, after being questioned by Quartz, Uber says it will pause referrals to its partners as it investigates the program.

“Last week, we made a commitment to drivers: to fundamentally change their experience with Uber for the better,” Uber said in a statement. “We take that commitment seriously, which is why we are halting referrals to third-party vehicle leases as we conduct a comprehensive audit of the third-party leasing program in New York City. We will not hesitate to make any changes necessary to fully honor our commitment to drivers.”

Uber operates in 76 countries and more than 450 cities, but it is uniquely strict in New York City about what types of cars are allowed. To get drivers in the city on the road with an Uber-approved vehicle, the company has encouraged people like Rosario to sign auto-financing contracts that create a relationship somewhat akin to indentured labor. The Uber rentals and Uber leases that Uber recommends carry weekly payments as high as $500. They also require the driver to sign a “payment deduction authorization” that lets the dealer or lessor take fees directly out of their Uber earnings, effectively garnishing their wages. Leasing a car with the intention of buying it—“lease-to-own”—typically takes three years, over which time a driver might pay for his vehicle two to three times over. TLC Financing Offers Lease to own over 2 years of payments at much more affordable rates.

Drivers receive this flyer at Uber’s Greenlight Hub service centers in New York City. (Uber)

On the “vehicle solutions” section of its New York website, Uber recommends four dealers—Tower, American Lease, Buggy TLC Rentals, and Fast Track Lease—as the “quickest way to get a car.” It describes the Uber weekly rentals as “flexible” and says that with Uber lease-to-own, “you pay less per week.” Drivers who visit one of Uber’s Greenlight Hub service centers receive a glossy black folder with a printout that advertises renting a new car “free” from a participating dealer, or visiting the Uber website to learn more about Uber lease-to-own, a “long term option with vehicle ownership at the end.”

Ninety-plus percent of professional drivers in New York City are immigrants and driving can be one of the few opportunities they have to earn money. The auto dealers Uber partners with target people with poor credit who otherwise might not be able to buy a car or get a loan. Uber, through its ads and signup process, has given drivers every reason to believe that these Uber lease and Uber rental contracts are a good choice. The reality can prove otherwise.

“Uber tells you, you can do this job when you feel like,” said Marion Wolfe, a former Uber driver and lessee in New York. “That’s not true. When you’re locked in with these leasing companies, you’ve got to go out there and make that money. You have to be out there and hustle to make that rent money for the car.”

I first met Rosario in late January at a meeting of the Independent Drivers Guild, a non-union group that represents Uber and other ride-hailing drivers in New York City. I arrived late to the meeting, around 9pm, and explained to a small audience that I was researching a story on people who lease cars to drive for Uber. Rosario quickly agreed to talk to me about his experience with Tower. “It was definitely double what it was worth,” he said of his lease that night. He sent me a copy of the paperwork provided by Tower, “summary of lease to own agreement,” a few weeks later.

At the time Rosario signed his lease with Tower, a 2015 Lincoln MKS was selling new for $45,292, according to data from auto research firm Edmunds. Rosario agreed to pay nearly twice that for a car that came with 14,000 miles (22,500 km) already on it. The weekly payments of $495, which included the cost of insurance but not repairs or maintenance, totaled $78,705 over three years. An additional $3,000 for a “non-refundable service fee” brought the total to $81,705. At the end of the term, Rosario had the option to purchase the car for $1.

Tower makes these sales “regardless of credit” so long as the applicant has professional driving experience. The lease explained that the $495 a week was a special rate, discounted from $525 for Uber drivers, and available “for as long as Lessee drives using the UBER Technologies, Inc. (‘UBER’) service.” It didn’t specify how often the driver needed to work for Uber to meet those standards, just that the car must be affiliated with an Uber base—a locally licensed dispatch center—at all times during the lease. Uber told Quartz those terms are decided by the dealer.

Uber approached Tower and several other dealers about setting up partnerships between 2013 and 2014 to help its thousands of newly licensed drivers get cars, a source familiar with the matter told Quartz. At the time many drivers were paying $450 to $600 a week to rent a car licensed as a for-hire vehicle with the New York City Taxi and Limousine Commission, the local taxi regulator, the source said. By offering dealers a steady stream of business and the security of payments facilitated by Uber, the company hoped it could also convince them to lower their rates.

Uber advertises Uber rentals and Uber lease-to-own options from its partner dealers on its New York website.

Uber car launched in New York in May 2011. The company told Quartz it began partnering with third-party dealers in July 2014 and does not take a commission or fee from the lease payments. It declined to specify how many drivers currently rent or lease their cars in New York through its four partner dealers, but said a “very small percentage” of drivers are in lease agreements. “New York City drivers who want to lease a car so they can earn with Uber are referred to dealers that offer competitively priced leases,” the company said in a statement. “We plan to review any complaints drivers have about these dealers.”

Uber’s leasing practices were referred to the New York state attorney general about two years ago, and the office has privately expressed interest in probing the matter, a source familiar with the matter told Quartz. The AG’s office did not immediately respond to a request for comment.

Tower is a servicer that manages auto loans day-to-day for leasing companies, which provide the actual financing. It produced Rosario’s contract on behalf of CB Livery Leasing, a company based in the Bronx and established in February 2015, according to papers filed with the New York Department of State. These days, Tower executes about 200 car contracts a month, most of them to Uber drivers, said Sazid Rahman, a sales consultant. Uber is the only ride-hailing company Tower is officially partnered with. Rahman said Tower makes these sales “regardless of credit” so long as the applicant has professional driving experience.

Rosario had no credit when he went to Tower to see about getting a car. The dealer told him it offered a non-credit plan that was less affordable and required weekly instead of monthly payments. After that, he said they didn’t ask about his assets or income, “just that I had a bank account and worked for Uber.” He paid $2,000 of the $3,000 service fee upfront, and the rest at a rate of $100 per week over 10 weeks.

Rosario’s lack of credit history put him in a category of borrowers known as “deep subprime.” Subprime auto lending is a growing problem in the US, reminiscent of the housing bubble before the 2007 crash. Over the last six years, it’s become much easier to borrow money to buy a car. The result is that the volume of auto loans made to “subprime” consumers with credit scores below 620 has soared.

In the third quarter of 2016, there were $280 billion worth of subprime auto loans in the US, according to data from the New York Fed and Equifax, compared to $188 billion in the third quarter of 2010. Of those loans, the share made to “deep subprime” consumers—those with credit scores below 550—has meanwhile climbed to 32.5% from 5.1% since 2010, according to research published in March by Morgan Stanley. Steve Eisman, the investor who famously shorted subprime home mortgages and earned a starring role in Michael Lewis’s The Big Short, is now eying subprime auto lenders.

Subprime lending can fill an important gap in the market by providing financing to people who might otherwise be unable to secure a loan. But the leases supplied to Uber drivers in New York are ripe for abuse, said Chris Kukla, executive vice president at the Center for Responsible Lending, after examining Rosario’s lease summary as well as a contract between Marion Wolfe and Buggy LLC. He poi