Ride-hailing firm Grab Philippines has been fined P10 million (US$186,895) by the Land Transportation Franchising and Regulatory Board (LTFRB) for overcharging its passengers.
Since 5 June 2017, Grab customers have been charged an additional Php 2 (~US$0.04) per minute for ‘travel fee’ on top of the upfront fares.
Under the government-approved fare scheme issued in December 2016, Grab Philippines can only charge its users a flagdown rate of Php 40 (US$0.75) and an additional Php 10 to Php 14 (US$0.19 to US$0.26) per kilometer.
The order also put a cap on surge pricing to only twice as much as the normal fare.
Grab To Reimburse Affected Users With Rebates
Besides penalising them with a fine, LTFRB has also ordered Grab to reimburse its customers through “rebates for future rides”.
According to the order, “the amount of the rebate shall be limited to the portion of the income of the respondent only, directly related to or arising from Php 2 per minute, during the period of its unauthorized imposition.”
However, Grab can still appeal the order within 15 days.
If the LTFRB denies the motion, Grab can raise it to the Department of Transportation (DOTr) instead.
“They (affected customers) are liable for a refund. With Uber now being absorbed by Grab, we’re looking at the potential of 2.8 million rides per week and all of them charging P2 per minute. This is the problem when there is a monopoly,” said PBA Representative Jericho Nograles in an interview with Rappler.
Based on his calculations, Grab owes its riders an estimated Php 3.2 billion.
Is The Php2/Minute Charge Legal?
Amid allegations of charging illegal fares, Grab Philippines maintained that it has always been “transparent” about its fare scheme.
Grab spokesperson Leo Gonzales said that the P2-per-minute charge was initiated “when Grab reviewed its pricing structure in June 2017,” and “was integrated to the existing per kilometer charges and is not added to the upfront fares.”
“Per minute charges remain part and parcel [of] Grab’s fare structure today, and we have continuously been transparent about this truth,” he added.
In its defence, Grab also said that LTFRB was aware of this additional charge and insisted that it was “legal”.
However, it admitted that its riders were not informed of the travel charges when they were first added to their fares in mid-2017.
In a company statement, Grab Philippines head Brian Cu cited a 2015 Department of Transportation (DOTr) order which allows transport network companies to change fares on their own.
“We stand by the legality of the P2 per minute fare component and we are disappointed by the order of LTFRB. We would like to reiterate that it is legal, pursuant to the DO 2015-011,” he said.
Meanwhile, the DOTr has given LTFRB full authority to help regulate fares of ride-hailing companies yesterday (June 11).
Featured Image Credit: Nikkei Asian Review