Uber arrived in Argentina working in a grey legal area, as usual. Word of mouth is that Uber refused to be classified as a transport company and insisted on being classified as a digital services company instead. These legal problems led to them being unable to accept Argentinean credit cards for payment. But Uber kept offering the service at a loss, allowing local drivers to accept cash and adding the debt to their driver profile. According to insiders, the drivers were expected to keep Uber's 25% cut aside and transfer it once in a while themselves. Although Uber eventually managed to get access to credit cards, they kept the cash option available.

The collateral damage of this policy is extensive.

Some drivers decided not to settle their debts with Uber, keeping 100% of the proceeds instead. If and when Uber closes the driver's account they get a new SIM card, send fake documentation, and start with a fresh account that lasts between a week and a month. These drivers accept only cash: they have no bank account data to provide because their data is fake, and they know that it's only a matter of time before their account gets banned anyway.

Because these drivers accept that their account is temporary, none of Uber's typical incentives work. When a passenger pays with credit card the money goes straight to Uber and the driver doesn't see a dime -- it all goes away to settle a debt they had no intention of paying. Therefore, drivers will often contact potential passengers asking how they intend to pay. If the passenger says "credit card", the driver either cancels the trip or straight up ignores the passenger forcing them to cancel. You can take the time and report the driver, but few people do it and all it does is to cause a mild inconvenience to the driver.

And while this is inconvenient for the passenger, it also opens the door to the really shady practices: once you have no way of verifying that the driver is who they claim to be, you are one step away from being robbed by a fake driver (in Spanish).

In short, Uber Argentina has become yet another dysfunctional taxi service. And rival local apps are catching up: not only do they have their paperwork up to date, but they have also incorporated apps into their daily routine. It would be no surprise if Uber were still operating in Argentina just for PR purposes. With a 43% drop in revenue for Latin America last year, and with Uber pinky swearing that they will achieve profitability any time now, the only reason I can see for Uber operating in Argentina is to keep the illusion of "one app for the entire world".

And sure, that's a fair point. But I have no reason to believe that these problems are exclusive to Argentina, and probably neither should you. I wrote this story because I found it interesting and I picked Argentina because that's what I know about, but if you are one of those tourists who blindly gets into an Uber believing that their drivers are more honest than taxi drivers you may be up for a rude awakening. Apps are not well known for solving deep, systemic social problems after all.

Sources

The information for this post came from these threads in Reddit's /r/argentina: Thread 1, Thread 2, Thread 3.