(Repeats to widen distribution)
By Stephen Eisenhammer and Brad Haynes
SAO PAULO Feb 14 On a Thursday night last
September, Uber driver Osvaldo Luis Modolo Filho accepted a ride
request from a teenage couple on the eastern edge of Sao Paulo,
to be paid in cash.
A few blocks from their destination, the passengers - who
hailed the ride on the Uber app with a false name - drew two
blue-handled kitchen knives. They repeatedly stabbed the
52-year-old driver and drove away with his black SUV as he lay
bleeding in the road. Two of his fatal wounds were so deep
police would first mistake them for bullet holes.
Police later found the car, arrested the couple and accused
them of murder in the service of car theft. They are awaiting
sentencing and lawyers for both have vowed to appeal.
Uber said Modolo Filho was its first driver to be murdered
in Brazil. He would not be the last. Police have confirmed six
murders since his death, with local press reporting more than a
A Reuters analysis of crime data obtained by public
information request from Sao Paulo's state security secretariat
showed a spike in robberies involving Uber drivers since July,
when the company started accepting cash payments in the city,
raising questions inside the company as to why it did not act
faster to address the problem.
Traditionally, Uber has charged rides to credit cards
registered by users, offering an easy way to verify passengers
and track them down if needed. It changed that policy across
Brazil last year, allowing customers to pay with cash to
turbo-charge growth in a crucial new market.
Demand took off, but so did crime. In Sao Paulo, robberies
involving Uber drivers rose ten-fold, the data shows. Attacks
rose from an average of 13 per month in the first seven months
of 2016, reflecting some degree of danger even before the cash
option took effect, to 141 per month in the rest of the year,
the data shows. [tmsnrt.rs/2lFkxZT
Assaults involving regular taxi drivers in the city rose by
just a third in the same period, according to crime data
obtained by a separate freedom of information request filed with
same security officials, as a deep economic downturn lifted all
robberies in the city about six percent.
The crime data obtained by Reuters covers Jan. 1 to Dec. 31
2016 and shows all incidents of robberies involving taxi and
Uber drivers. It contains some margin for error as it
potentially includes attacks on passengers.
Police told Reuters the number of attacks on Uber drivers
could be much higher given it is a new service and many
incidents were likely registered in the system without
mentioning the app by name.
Drivers and police told Reuters the cash policy has provided
easy targets for criminals, allowing them to open accounts under
fake names, without credit cards to verify, and lure drivers
Presented with the findings, Uber declined to give monthly
details of ride growth in Sao Paulo but acknowledged it has seen
an increase in "safety incidents" without saying by how much.
Uber said it was not clear if rising crime was due to the cash
policy or the surge in business, which was boosted by the cash
option. Uber added its Sao Paulo operations grew by 15 times
over the course of 2016. The company said it is now taking steps
to make cash rides safer, such as verifying users with a
commonly used social security number.
Getting cash payments right in Brazil is a crucial test for
Uber as it pushes beyond developed markets, seeking faster
growth in poorer countries, where credit cards are less common
and public safety more precarious.
Drivers around the country have staged protests threatening
to quit if Uber does not reduce the risk of crime, while taxi
drivers and elected officials have pounced on isolated incidents
as evidence of a need for more restrictive legislation.
So far, Uber's business in Brazil is booming. At least 30
percent of its rides in the country are now paid in cash and the
rate is far higher in poor areas where credit cards are less
common, according to two company sources. In Sao Paulo, cash
accounts for most trips in outer boroughs, and the sources said
it helped the city overtake New York and Tokyo in recent months
to become Uber's biggest market by rides.
But a dozen current and former managers and drivers
criticized how Uber introduced cash in Brazil, saying the San
Francisco-based tech giant overlooked high levels of violent
crime as it rushed to grow in an unfamiliar market. Senior
executives now admit publicly that the company was slow to
introduce simple fixes once the dangers in Brazil were clear.
SLOW TO RESPOND
As recently as October, Uber denied there was a problem with
cash payments in Brazil. Andrew Macdonald, general manager for
the region, said that the company had studied if cash endangered
drivers and found it did not.
"If they're worried, it's a bit emotional," he said in an
interview with Bloomberg at the time.
One source involved in the cash roll out at Uber told
Reuters the internal study was conducted too soon after cash was
introduced, undermining its conclusions.
"With the numbers that cash was bringing in, no one wanted
to see that there might be a problem," the person said, asking
not to be named given the sensitivity of the matter.
Macdonald acknowledged to Reuters on Friday his statement
was "a mistake" and said Uber had been working on ways to
improve safety around cash payments since fall last year. He
declined to explain what had changed since the initial internal
He added the violence "weighs pretty heavily" on him and
other senior management, and that the company was rolling out
new features to protect drivers.
The requirement for new cash users to register with a social
security number known as a CPF went live across Brazil on
Monday, six days after Reuters sent detailed questions about
attacks on drivers and Uber's slow response.
Macdonald said he was confident the new feature would help
to reduce security issues and he wished the change had come
"It would have been ideal for us to have gotten the CPF
verification out sooner, and so we absolutely own that,"
Macdonald added Uber was also looking at giving drivers the
chance to opt out of accepting cash, which the company is
piloting in some cities in Brazil and Chile, along with an
algorithm blocking new cash users if they show odd behavior such
as canceling several rides.
"This has been a priority for us since the end of last
year," Macdonald said, adding it was a concern for Uber globally
as it pushes into poorer regions to fuel growth.
"It's not easy, because of course you really believe that
it's important to serve all neighborhoods in a city, but not all
neighborhoods are made equal in terms of crime."
Uber first started accepting cash in India in May 2015. The
move was a success and the company decided last year to roll out
cash across Asia and Latin America as Uber raced to make the
most of a first-mover advantage.
Just 20 percent of payments in Brazil are made digitally,
compared to nearly half in the United States, creating huge
potential for cash services. Uber presents itself to customers
as cheaper and safer than traditional taxis because the app
tracks a user's location in real time, regardless of whether the
payment is by credit card.
Still, one source, speaking anonymously to avoid
retaliation, said he was directly involved in raising concerns
to headquarters about the decision to accept cash in Brazil.
Before bringing cash payments to Brazil, Macdonald said Uber
had already tested them in nearly 100 cities globally without
seeing a spike in crime and had no reason to believe Latin
America's largest country would be any different.
Now, he says Brazil, whose murder rate is nearly 10 times
that of India, is "somewhat of a unique challenge."
Regular taxi drivers have long had to deal with Brazil's
unsafe streets, but protect themselves by sticking to safer
neighborhoods and declining rides to dangerous areas. By
contrast, the Uber app globally does not inform drivers of the
destination of a ride before they accept it and drivers can be
banned from the app if they refuse to take passengers where they
want to go.
That gave little choice to driver Modolo Filho in September,
when he saw his teenage passengers wanted a ride to the far side
of Heliopolis, a mix of housing projects and bare brick
construction that is Brazil's most populous slum.
The day after Modolo Filho's death, Uber drivers took to the
streets of Sao Paulo to protest his murder and the cash policy
they said cost him his life, calling publicly for the app to
verify users by CPF, as retailers and restaurants do routinely
On Monday, five months later, Uber introduced the feature.
(Reporting by Stephen Eisenhammer and Brad Haynes; Additional
reporting by Heather Somerville in San Francisco; editing by Dan
Flynn and Edward Tobin)