Author: Benjamin Edelman

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Uber Can’t Be Fixed — It’s Time for Regulators to Shut It Down

Edelman, Benjamin G. “Uber Can’t Be Fixed — It’s Time for Regulators to Shut It Down.” Harvard Business Review (digital) (June 21, 2017). (Translations: Japanese, Russian.)

From many passengers’ perspective, Uber is a godsend — lower fares than taxis, clean vehicles, courteous drivers, easy electronic payments. Yet the company’s mounting scandals reveal something seriously amiss, culminating in last week’s stern report from former U.S. Attorney General Eric Holder.

Some people attribute the company’s missteps to the personal failings of founder-CEO Travis Kalanick. These have certainly contributed to the company’s problems, and his resignation is probably appropriate. Kalanick and other top executives signal by example what is and is not acceptable behavior, and they are clearly responsible for the company’s ethically and legally questionable decisions and practices.

But I suggest that the problem at Uber goes beyond a culture created by toxic leadership. The company’s cultural dysfunction, it seems to me, stems from the very nature of the company’s competitive advantage: Uber’s business model is predicated on lawbreaking. And having grown through intentional illegality, Uber can’t easily pivot toward following the rules.

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Passenger Right to Record at Airports and on Airplanes? with Mike Borsetti

Passengers have every reason to record airline staff and onboard events–documenting onboard disputes (such as whether a passenger is in fact disruptive or a service animal disobedient), service deficiencies (perhaps a broken seat or inoperational screen), and controversial remarks from airline personnel (like statements of supposed rules, which not match actual contract provisions). For the largest five US airlines, no contract provision–general tariff, conditions of carriage, or fare rules–prohibits such recordings. Yet airline staff widely tell passengers that they may not record–citing “policies” passengers couldn’t reasonably know and certainly didn’t agree to in the usual contract sense. (For example, United’s policy is a web page not mentioned in the online purchase process. American puts its anti-recording policy in its inflight magazine, where passengers only learn it once onboard.) If passengers refuse to comply, airline staff have threatened all manner of sanctions including denial of transport and arrest. In one incident in July 2016, a Delta gate agent even assaulted a 12-year-old passenger who was recording her remarks.

In a Petition for Rulemaking filed this week with the US Department of Transportation, Mike Borsetti and I ask DOT to affirm that passengers have the right to record what they lawfully see and hear on and around aircraft. We explain why such recordings are in the public interest, and we present the troubling experiences of passengers who have tried to record but have been punished for doing so. We conclude with specific proposed provisions to protect passenger rights.

One need not look far to see the impact of passenger recordings. United recently summoned security officers who assaulted passenger David Dao, who had done nothing worse than peacefully remain in the seat he had paid for.  The officers falsely claimed that Dao was “swinging his arms up and down with a closed fist,” then “started flailing and fighting” as he was removed.  United CEO Oscar Munoz’s falsely claimed that Dao was “disruptive and belligerent”.  Fortunately, five passenger recordings provided the crucial proof to rebut those claims.  Dao and the interested public are fortunate that video disproved these allegations. But imagine if United had demanded that other passengers onboard turn off their cameras before security officers boarded, or delete their recordings afterward and prove that they had done so — consistent with passenger experiences we report in our Petition for Rulemaking. Had United made such demands, the officers’ false allegations would have gone unchallenged and justice would not have been done. Hence our insistence that recordings are proper even–indeed, especially–without the permission of the airline staff, security officers, and others who are recorded.

Our filing:

Petition for Rulemaking: Passenger Right to Record

DOT docket with public comment submission form

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Enumerating Uber’s Scandals

Collecting my thoughts for an article about Uber’s mounting scandals and the proper legal and regulatory response, I took some time to review the range of recent concerns. It’s overwhelming — new issues arising daily, and prior problems almost inevitably forgotten. But by dividing the misdeeds into a taxonomy of subject areas, I’m seeing trends — identifying the areas where Uber falls furthest short. I offer my notes to others in hopes that they can help.

My tabulation:

Uber Scandals

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David Dao on United Airlines (teaching materials)

Edelman, Benjamin, and Jenny Sanford. “David Dao on United Airlines.” Harvard Business School Case 917-026, May 2017. (educator access at HBP. request a courtesy copy.)

In widely circulated videos, United staff and Chicago security forcibly remove a passenger from his paid seat on an aircraft, injuring him severely. United leadership must decide how to respond to public outcry.

Teaching Materials:

David Dao on United Airlines – Teaching Note (HBP 917027)

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Racial Discrimination in the Sharing Economy: Evidence from a Field Experiment

Edelman, Benjamin, Michael Luca, and Daniel Svirsky. “Racial Discrimination in the Sharing Economy: Evidence from a Field Experiment.” American Economic Journal: Applied Economics 9, no. 2 (April 2017): 1-22.

In an experiment on Airbnb, we find that applications from guests with distinctively African-American names are 16% less likely to be accepted relative to identical guests with distinctively White names. Discrimination occurs among landlords of all sizes, including small landlords sharing the property and larger landlords with multiple properties. It is most pronounced among hosts who have never had an African-American guest, suggesting only a subset of hosts discriminate. While rental markets have achieved significant reductions in discrimination in recent decades, our results suggest that Airbnb’s current design choices facilitate discrimination and raise the possibility of erasing some of these civil rights gains.

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Build Interactive Web Sites as Easily as Spreadsheet Formulas?

"Man is a tool-using animal… Without tools he is nothing, with tools he is all."     – Thomas Carlyle, 1834

I’m rarely effusive in my praise for a new tool, but I can hardly overstate my excitement about Bubble, a web programming system. The basic concept: Draw the web app you want, using standard components like text boxes, images, and buttons. Create "thing" objects to hold the app’s data, specifying the characteristics (fields) of each thing and the way one type of object relates to another. Then add flowchart-style "workflow" procedures to explain what happens when. Amazingly, this process yields a multiuser interactive web app that works as you instructed and as you’d expect.

Use Cases

Bubble is a particularly clear fit for entrepreneurs whose business concepts call for custom web apps. Suppose you have an idea for an online service—maybe you’ll match dog-walkers with dog-owners needing assistance, or you’ll help annoyed motorists report commercial drivers parked illegally. For such a project, you might hire a developer through a service like Upwork. But an outsourced developer carries some important problems. For one, the developer might not see the vision you have in mind, despite your best efforts to explain the features desired. (That’s all the tougher because many entrepreneurs don’t have experience writing specifications or providing precise requests.) In all likelihood, you’ll want some adjustments based on tests with early customers and a better understanding of their needs. Even if things go perfectly, you’ll often end up beholden to the developer for future changes; switching developers often entails prohibitive delay and expense given the difficulty of editing other people’s code. Meanwhile, developers also worry about creeping project scope, unclear requirements, and payment disputes—so they end up having to quote high fees in anticipation of these predictable problems. Entrepreneurs often accept these tradeoffs for lack of alternatives. But Bubble offers another way—letting a diligent entrepreneur build a working prototype without an outside technical specialist. Doing the work yourself, there’s no risk of communication breakdown, and changes entail effort but not out-of-pocket expenditure. A surprisingly committed community of other Bubble users provides assistance with anything unexpected.

In fact, Bubble should be equally useful in established organizations. Most companies have centralized software for their core processes, but often ad hoc solutions around the edges. Software for submitting expense reports, requesting a loaner laptop, or signing up for the company softball team? These are usually ad hoc, making do with Dropbox or Google Docs or a piece of paper on a clipboard. Furthermore, as a company’s core business changes, some features end up missing from the company’s main software systems. Often tools are carryovers from decades past—making it difficult to add modern improvements. One might hope that well-run companies would prioritize their requirements for robust implementation by centralized IT staff. But finding development resources can be surprisingly difficult, with constant pressure from excess requests. Here too, Bubble offers a promising alternative, allowing the end users who best know a situation to write the software that will make them more efficient. Savvy end-users have been building this kind of thing for years, all the way back to the PC revolution. But with Bubble, it’s modern, web-enabled, and API-connected.

Bubble in Context

It’s natural to compare Bubble to Visual Basic, the Microsoft programming environment that made programming accessible to a generation of self-taught enthusiasts (myself included). But where VB ultimately requires developers to write code (albeit in a relatively intuitive language), Bubble does not. Instead, Bubble’s workflow instructions are graphical, composed of actions like "make changes to a thing" or "go to page," each chosen from a menu. Then there’s no frightening blank screen confronting a new developer, and no magic syntax to learn.

In some respects, Bubble is closest to worksheet functions, widely used in Microsoft Excel, Apple Numbers, and Google Sheets. One might also compare Bubble programming to macros in Microsoft Access or scripts in FileMaker Pro. In each of these environments, as in Bubble, designers use a series of predefined functions, chosen from an on-screen menu, to create software logic. But Bubble’s apps can do notably more. For example, compared with Excel, Bubble boasts a full relational database with custom types a user creates. And where Excel files usually reside on a user’s hard drive, Bubble apps run in the cloud—naturally combining data from multiple users with full interactivity. Running in the cloud, Bubble can easily interact with other services—show a Google Map, charge a user’s credit card, add an email to a mailing list.

Bubble is arguably closest to Microsoft Visual Studio LightSwitch, which similarly helps casual developers build web forms to access server-side data, automating low-value "plumbing" tasks. Indeed, I’m a big fan of LightSwitch. But LightSwitch comes with some baggage from its Microsoft roots. The paid license isn’t a showstopper for serious users, and these days LightSwitch can build standard HTML apps usable on any platform and in any browser. Ultimately, most LightSwitch apps require that users write some code, creating a steeper learning curve and excluding a fair number of users who can make good use of Bubble.

One might also compare Bubble to the various web site templates. Two decades ago, GeoCities made it easy to make and host a web site with no code required—but Bubble is quite different, building interactive database-backed applications , not just static web pages. Some modern template-based tools allow limited interactivity such as shopping carts and signup pages. With these tools, users are stuck with the logic that a designer anticipated; it’s usually possible to hide unwanted options or add extra pages, but not to change the underlying concept or workflow. In contrast, Bubble lets a designer build an arbitrary site and with a novel structure.

Handholding for those who need it

Many advanced users can reasonably follow Bubble’s online training, then design their own apps. Indeed, that’s how I learned Bubble. The company’s interactive lessons show key tasks.

A set of consultant-advisors now offer another way. Broadly, these vendors use Bubble to write apps more quickly and at lower cost than typical consultancies, passing much of the savings back to customers. And if customers later want to make modifications of their own, they can learn a bit of Bubble in order to do so at zero out-of-pocket cost.

I’m most familiar with AirDev, a design shop where business-oriented generalists build Bubble apps to suit customer requirements. A few months ago, AirDev added a "sprint" option with flat pricing and an amazing five day turnaround for scope and build. They offered me a free test, building a custom scheduling app to my specifications. I told them what I wanted; they came back with reasonable clarifying questions; and a week later I had an app. I sent a few adjustment requests, which they quickly implemented. And when I had subsequent ideas for further improvement, I used the standard Bubble development environment to make changes. I’m now using the tool with students, to rave reviews.

Limitations

When I first tried Bubble a few years ago, I found some significant limitations—difficulty getting data in and out, limitations on what APIs were supported, sluggish pages. Those challenges all seem to be in the past. Meanwhile, a lively forum of Bubble enthusiasts helps to vet and prioritize feature requests, accelerating improvements.

My relationship with Bubble

I wrote this post on my own, not at the request of Bubble or AirDev. I’m a big fan of their approach but have no economic relationship with either company. AirDev’s generous offer of a free "sprint" came out-of-the-blue and with no strings attached, not contingent on my writing about it; I elected to do that on my own because I was so impressed with their offering.

Bubble was founded in 2012 by Josh Haas and Emmanuel Straschnov. Though Emmanuel was not my student during his time at HBS, he has been kind to the school, including assisting numerous "FIELD 3" student teams working on rapid-turnaround microbusinesses, as well as guest-teaching in my class as part of my efforts to help business students strengthen their software engineering skills.

AirDev came in part from one of my former students, Andrew Haller, who joined with Vlad Leytus based on their shared experience wanting to make it easier to build online services. As I mentioned above, AirDev offered me a free "sprint," but this article was at my own initiative.

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Design of Search Engine Services: Channel Interdependence in Search Engine Results

Edelman, Benjamin, and Zhenyu Lai. “Design of Search Engine Services: Channel Interdependence in Search Engine Results.” Journal of Marketing Research (JMR) 53, no. 6 (December 2016): 881-900. (First posted April 2013.)

The authors examine prominent placement of search engines’ own services and effects on users’ choices. Evaluating a natural experiment in which different results were shown to users who performed similar searches, they find that Google’s prominent placement of its Flight Search service increased the clicks on paid advertising listings by more than half while decreasing the clicks on organic search listings by about the same quantity. This effect appears to result from interactions between the design of search results and users’ decisions about where and how to focus their attention: users who decide what to click based on listings’ relevance became more likely to select paid listings, while users who are influenced by listings’ visual presentation and page position became more likely to click on Google’s own Flight Search listing. The authors consider implications of these findings for competition policy and for online marketing strategies.

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Three Problems in Protecting Competition (teaching materials) with Lena Goldberg

Edelman, Benjamin, and Lena Goldberg. “Three Problems in Protecting Competition.” Harvard Business School Case 917-012, November 2016. (Revised March 2017.) (educator access at HBP. request a courtesy copy.)

In three mini-cases, readers see a range of disputes in competition law—and apply legal principles to assure fair competition.

Teaching Materials:

Three Problems in Protecting Competition – Teaching Note (HBP 917014)

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How to file and pursue a consumer complaint against an airline – and the DOT “formal complaint” process

In the United States, there are seven basic options for a consumer who wishes to pursue a dispute with an airline, travel agent, or tour operator:

  1. Informal correspondence with airline customer relations staff. Easy, usually via web site submission. You’ll typically get a response. (Indeed, US Department of Transportation rules require an airline to send a substantive written response within 60 days.) But there’s no guarantee that the complaint will be handled by someone who truly understands, nor that the response will be helpful or correct. The airline may anticipate that many people complain but few follow up on an unfavorable response — reducing their incentive to provide a full resolution or even conduct a complete investigation. Some customer relations staff may not have sufficient information or training to investigate unusual problems.
  2. Credit card chargeback. This is most useful if there is a recent, easily-provable, and impeccably documented overcharge. In principle, the merchant (airline) is obliged to demonstrate your acceptance of the charge and their performance of the promised service — and in principle the burden of proof is on their side. Furthermore, credit card disputes are adjudicated by card network staff who do not directly report to airline management, reducing some conflicts of interest. Credit card procedures are particularly useful to passengers in case of bankruptcy of an airline or travel agent, obliging the airline’s bank to provide the refund even if the airline cannot, whereas other methods typically are typically unable to assist in that circumstance. Furthermore, a successful credit card chargeback yields a direct payment (refund) to the passenger, with no need to pursue a collection effort against a distant company. Nonetheless, I am told that most credit card disputes are resolved in favor of airlines, as their positions are supported by at least an appearance of reliable records. Moreover, credit card dispute processes make it difficult to challenge records as unreliable or incorrect, or to challenge airline policies as violating law or regulation. These shortfalls make credit card disputes a poor fit for complex matters or unusual allegations.
  3. Litigation, most often in small claims court. Some judges are open to the suggestion that airlines screwed up, broke the law, or even failed to follow their own rules. Of course there’s no guarantee that the judge will be an expert or will be able to take the time to understand the unusual situation you describe or the specialized rules and laws pertaining to aviation. Decisions are usually unpublished and informal, making it easy for passengers’ arguments not to be considered in full.
  4. Pursue special state claims. Some states offer “seller of travel” laws (which could apply based on your residence, the state where the ticket was purchased, or the state where the online travel agency is based). These occasionally provide some recourse or compensation, for example if a travel agency or tour operator goes out of business or absconds with your money.
  5. Pursue any redress available under foreign law. Consider such options if the flight was international (potentially including domestic segments of an international itinerary) or the ticket was purchased from an airline office, travel agency, or tour operator outside the United States. Some countries offer greater protections than the United States. That said, most consumers would face significant difficulties pursuing claims in a jurisdiction where they do not reside.
  6. Informal DOT complaint (via this web form). DOT routes your complaint to a higher caliber of representative from the airline, compared to #1, and sometimes these staff are better positioned to assess your claim, consider the merit in your position, and provide a meaningful resolution. In principle DOT reviews the resolution of each matter, and this oversight or potential oversight imposes causes airlines to be more careful in responding to consumers’ informal DOT complaints. On the other hand, the proceeding is nonetheless secret and off-the-record. Your complaint will do nothing to help anyone else and typically won’t cause a change that fixes the underlying problem. DOT staff are sometimes involved in mediating these disputes, but you can’t count on this kind of assistance. Indeed, the Office of Inspector General found that the DOT’s reviews of passenger complaints are insufficient to determine whether airlines engage in unfair and deceptive practices.
  7. A formal DOT complaint via the process detailed below. These proceedings are formal and on the record. You’ll be corresponding with an airline’s designated representative, typically an attorney. All filings will be published on the web for anyone interested to read, and Airlineinfo and its Twitter feed make it particularly easy for the interested public to find and follow these disputes. DOT staff ultimately prepare a written decision summarizing each party’s position and offering an assessment. These factors increase the likelihood of a full investigation and proper analysis. That said, airlines take the position that DOT lacks authority to order refunds to affected passengers. Furthermore, decisions are often slow, commonly taking a year or longer.

This page elaborates on the seventh option, formal DOT complaints, as this process is not widely understood and not widely used despite its important potential benefits as detailed above.

Filing a formal complaint with the DOT: instructions and what to expect

For those inclined to proceed with formal DOT complaints, here are my tips based on the several such complaints I have filed and based on others’ complaints that I have followed.

There are five steps to filing a formal complaint with the DOT:

  1. Use my Microsoft Word Complaint Template to write your complaint. Explain the airline’s violation as clearly as you can. Use exhibits if needed to support the factual allegations. Consider exhibits to show relevant screenshots, call recording transcripts, ticket printouts, correspondence with customer relations, etc. Be sure to fill in your name in complaint header. On the title page and first page, leave the ___ placeholder (after the year) as docket number in your complaint; a docket number gets assigned by DOT staff after submission of the initial complaint. (If you use the template to file a reply or other supplemental document, insert the docket number then.)Avoid including personal information you do not want to reveal to the public. If needed, you can prepare two versions of the file – one “public” (redacted, for uploading to Regulations.gov in step 4 below) and one private (with ticket numbers, passenger names, etc. for sending to DOT staff and airline attorneys in step 5 below).See sample complaints to confirm format and get a better understanding of typical style.
  2. Find the registered agent for the airline you’re complaining about. Use the DOT’s dockets for agents for service of process for foreign airlines or for domestic airlines, as appropriate. Insert the agent’s name and email onto the Certificate of Service page where indicated. After finding the agent’s name, you may need to use web search to find the corresponding email address. Many large airlines use attorneys at outside law firms as their designated agents. In that case, you can check the law firm’s web site or even call the law firm’s main line to request the attorney’s email address.  (Unfortunately sometimes the designated agent is out of date.  See DOT admonition to airlines to keep this up to date.)
  3. Save the Word file into PDF for upload and submission.
  4. File the public version of the complaint on Regulations.gov. Go to the unusually-named Instructions on Filing a Submission to DOT–OST for applications/petitions/exemptions and any other items for which a Docket does not exist. Press the Comment button, then submit your complaint.  Suggested title: “Third party complaint of [your name] – [airline name] – [date]”.  Suggested comment: “Please see attached complaint”. Use the Attach Files command to submit the public version of your complaint PDF.  Provide your email address, first name, and last name when prompted.  It is optional to provide your contact information through the Regulations.gov submission tool. Note the Comment Tracking Number that results from your successful submission. Although Regulations.gov uses the term “Comment” during the submission process, your complaint will actually be posted as its own docket, not as a comment to any preexisting docket.
  5. Serve the private version of the complaint on the airline’s agent and on the DOT by email:

    To: [agent email from step 2], blane.workie@dot.gov; robert.gorman@dot.gov; kimberly.graber@dot.gov

    Subject: Third party complaint of [your name] – [airline name] – [date]

    Greetings,

    A redacted public complaint (as to certain practices of [airline name]) was filed on Regulations.gov earlier today. Attached is the full version including private information.

    Regulations.gov Comment Tracking Number: [insert comment tracking number]

    Thank you,

    [your name]

The DOT contacts change from time to time. The three DOT contacts listed above are current (to my knowledge) as of October 2016.

Here’s what to expect after filing:

Once your complaint is docketed at Regulations.gov, you’ll usually get an email from DOT staff to that effect. If not, wait a few days, then run a search for your last name on Regulations.gov. Each Regulations.gov docket page provides a mechanism for automatic email notification when new filings are made in that docket. I highly recommend using that notification mechanism, including renewing it annually if your complaint remains unresolved after one year. Sometimes DOT or airline staff may forget to (or otherwise fail to) notify you of a new filing.

Formal complaints are governed by DOT rules contained in 14 CFR 302 subpart D. It’s useful to read those rules to learn what to expect.

An airline must respond to your complaint (by filing its “Answer”) within 15 days, unless it requests and receives an extension from DOT. DOT staff usually provide such an extension when requested. Airline representatives will ask you to accept, which you virtually must – in the sense that if you declined, the DOT would probably grant the extra time anyway. It’s also polite to grant the extra time; the benefit of this formal complaint process is its formality and its rigor, not its speed.

There is no guarantee of any particular timing for DOT judgment or resolution. Many complaints have gone more than a year without resolution. After a lengthy wait, you could inquire with DOT staff or contact your federal representatives to seek their assistance. I have not used these methods.

In general, a complainant has no right to respond to an airline’s Answer. If you want to file such a response (a “Reply”), you should seek agreement from the airline to do so (typically followed by a counter-response from the airline, called a “Surreply”). You must then seek DOT permission to reply. This can be an informal email to DOT attorneys, CC’ing the airline representative. You may want to propose a maximum page length, timing, and purpose. You’ll adapt the Complaint Template to file your reply, including replacing the “Complaint” heading with “Reply” (in every location including first page caption, second page caption, first page header, and subsequent page header) and adding the docket number on the first and second pages.

Once you file a formal complaint, you should avoid informal communications with DOT staff on the same subject.

Others have reported that airlines sometimes attempt to “buy off” a complainant privately – provide some money or whatever a complainant is requesting, in exchange for the complainant withdrawing the complaint. If you accept such an offer and withdraw your complaint, there will probably be no further proceedings in the docket, and hence nothing to benefit other passengers with similar problems. On the other hand you’ll get an immediate personal benefit.

I am unable to provide legal assistance to complainants, but I am often able to provide procedural pointers based on my experience in this area. Contact me.

Credits

My sincere thanks to Edward Hasbrouck, whose special knowledge of all things aviation-consumer spurred my interest in this subject. Thanks also to Mike Borsetti, whose knowledge of fare rules helped me understand my rights.