For the second time in just two years, Uber Technologies Inc. (NYSE: UBER) has lost its license to operate in London, one of the company’s biggest markets. The decision, by Transport of London (TfL), follows a review of Uber’s application to renew its license to operate in the city.
A key issue, according to TfL’s announcement, was “a change to Uber’s systems [that] allowed unauthorised drivers to upload their photos to other Uber driver accounts,” allowing the unauthorized drivers to pick up passengers as if they were the booked drivers. The TfL said that this happened for “at least 14,000 trips” and put “passenger safety and security at risk.”
Uber first lost its license to operate in London in September 2017 for failing to complete proper background checks on its drivers and to report serious criminal offenses. The company was able to get a temporary license in June 2018 that expired this past September along with a two-month extension that expires Monday.
TfL was direct about its decision:
… TfL has identified a pattern of failures by the company including several breaches that placed passengers and their safety at risk.
Despite addressing some of these issues, TfL does not have confidence that similar issues will not reoccur in the future, which has led it to conclude that the company is not fit and proper at this time. …
This pattern of regulatory breaches led TfL to commission an independent assessment of Uber’s ability to prevent incidents of this nature happening again.
This work has led TfL to conclude that it currently does not have confidence that Uber has a robust system for protecting passenger safety, while managing changes to its app.
Uber has 21 days to appeal the TfL decision during which time the company may continue to operate. Under the law, Uber may also continue operating throughout any appeals process and the company “may seek to implement changes to demonstrate to a magistrate that it is fit and proper by the time of the appeal.”
Helen Chapman, Director of Licensing, Regulation and Charging at TfL, said, “If they do appeal, Uber can continue to operate and we will closely scrutinise the company to ensure the management has robust controls in place to ensure safety is not compromised during any changes to the app.”
Uber’s stock traded down more than 4% in Monday’s premarket session at $28.30 in a 52-week range of $25.58 to $47.08. The 12-month price target on the stock is $44.76.