Why it matters


Uber has agreed to pay $20 million to settle a case that began with a customer's typo. Plaintiff Maria Vergara, who claims she never signed up for an Uber account, brought suit, alleging Uber sent her a series of unsolicited text messages urging her to complete a sign-up process she never initiated. According to Uber's attorney, another user had mistakenly transposed digits of their own phone number during the sign-up process, causing the plaintiff to erroneously receive the text message "Your Uber account verification number is: [four-digit numeric code]. Enter this in our app to confirm your Uber account." Meanwhile, the would-be Uber user, whose verification code went to the plaintiff, continued to request that the verification code be re-sent, causing the plaintiff to receive a total of eight misdirected verification code texts. In addition to monetary compensation, Vergara sought for Uber to update its procedures to avoid these types of mistakes going forward.

With a Motion for Judgment on the Pleadings pending, the parties agreed to mediation. Meanwhile, Uber drivers who had filed their own class action against Uber joined the mediation. Many of the Uber driver plaintiffs had begun the process to sign up as Uber drivers but did not become "active" drivers in Uber's system, and claim they did not provide express consent to receive automated text messages. And plaintiff Sandeep Pal claims to have received unsolicited automated text messages in connection with Uber's "Refer-a-Friend" program without his consent.

The settlement agreement proposes three classes:

  1. Everyone Uber texted about its Refer-a-Friend program
  2. Prospective drivers who partially completed Uber's application process and continued receiving texts after asking Uber to stop
  3. Others, like Vergara, who did not provide their information to Uber but received unwanted texts from Uber

By all accounts, $20 million is a very large settlement, especially considering the hurdles plaintiffs faced both in obtaining class certification and on the merits. Individual issues of when, how and whether consent was revoked could easily predominate for the class of prospective Uber drivers who did not complete the application process. Furthermore, an autodialer may not have been used to send Vergara the offending texts, which were manually initiated by another user.

In addition to agreeing to pay $20 million, Uber agreed to (1) discontinue its Refer-a-Friend program automated text messages; (2) improve its opt-out system to automatically unsubscribe SMS recipients who reply with certain opt-out words; and (3) augment its sign-up process to reduce the likelihood of texting or calling the wrong phone numbers by (i) automatically deleting from its database any phone number not verified within 15 minutes, (ii) displaying the phone number entered and asking "Did you enter the correct number?" before resubmitting a verification code request, and (iii) having the system force the user to re-enter his or her phone number after one verification text resend.

The attorneys will get one-third of the settlement fund, and each named plaintiff will receive a $10,000 incentive award. The case is Vergara v. Uber Technologies, Inc., No. 1:15-cv-06942 (N.D. Ill.).

Why it matters

It is currently common practice for companies to text a verification code at a user's request in order to verify that the user has entered valid information. Now, to minimize their TCPA risk, companies may need to implement systems to ensure the accuracy of the information entered into their verification systems. This case may also create liability issues for companies that text their job applicants and independent contractors about employee incentive programs.

For further information on this topic please contact Christine Reilly at Manatt Phelps & Phillips LLP by telephone (+1 310 312 4000) or email ([email protected]). The Manatt Phelps & Phillips LLP website can be accessed at www.manatt.com‚Äč.

This update has been reproduced in its original format from Lexology – www.Lexology.com.