Audit: Las Vegas cabs overcharging by $47 million a year
CARSON CITY, Nev. – If the cash you doled out for a Las Vegas cab ride hurt your wallet, it’s not all in your head – auditors in Nevada also think taxi rates are outrageous.
Las Vegas-area cabs are overcharging customers to the tune of $47 million a year, according to an audit released Tuesday of the Nevada Taxicab Authority, which regulates the rides in Clark County.
Auditors for the governor’s finance office blamed a $3 credit card processing fee that they say is much higher than in other cities and probably shouldn’t exist. They also criticized a decision to increase a fuel surcharge even as gas prices are tanking and said having the surcharge at all is unique among the 12 major Western cities that the taxi board tracks.
“The board’s decision is a windfall for the industry, which is able to pass additional operational costs on to the public,” the audit says. “These are mostly tourist/visitor dollars that would otherwise likely be spent elsewhere in the local economy.”
The criticism comes a few months after ride-hailing companies Uber and Lyft started operating in Nevada with promises of cheaper and more convenient rides. The taxi industry, which makes big bucks taking tourists on a 5-mile trip from the airport to the Strip, fought hard against allowing the companies before losing its battle in the Legislature last spring.
Representatives of a union representing many area taxi drivers said they have long fought to end the credit card fees, arguing they enrich the cab company but hurt drivers. For example, some passengers mistakenly believe it is a tip for the driver and skip the gratuity.
“It is absolutely, utterly ridiculous to have a credit card fee of $3. That’s absurd,” said Sam Moffitt, a union organizer representing drivers of the large taxi company Yellow-Checker-Star. “The drivers do not get any portion of that money.”
Gene Auffert, CEO of Yellow-Checker-Star, declined to comment. Kimberly Maxson-Rushton, director of a Las Vegas-area taxi company association, didn’t immediately return a call seeking comment.
Uber spokeswoman Taylor Patterson declined to comment on the audit, except to say her company will continue to offer affordable rides to Nevadans.
Auditors say a cab fuel surcharge that regulators approved last summer is based on a federal gas-price average that’s higher than Las Vegas rates. They say the fee structure, which the taxi industry supports, is designed so customers pay a full 12 cents more per mile once gas hits $3.25 a gallon, instead of kicking in gradually depending on how high gas prices rise.
The audit panned the $3 credit card transaction fee, saying it far exceeds the cost of cab companies accepting cards. State agencies pay 8.5 cents to Wells Fargo per credit card transaction, auditors said, and taxicab regulatory agencies in other cities allow fees between 3.8 percent and 5 percent of the total fare.
The $3 fee accounts for about 17 percent of the total average cab fare in Clark County and should be immediately reduced to 90 cents at most or halted altogether, auditors said.
“The credit card fee structure provides multiple opportunities for the industry to maximize revenue at the expense of the public and local economy,” auditors said, noting that many large cities don’t charge extra for credit card processing.
Auditors were so critical of the Nevada Taxicab Authority that they recommended abolishing it and turning over its duties to the county or the state Transportation Authority, which oversees cabs in other parts of Nevada.
Ron Grogan, chief of the authority, said the taxi board would have to discuss the recommendations before making changes. But he acknowledged that his agency had probably outlasted its usefulness.
The state Department of Business and Industry “recognizes that for many years the Taxicab Authority has been unable to institute the best practices of the industry due to a complex regulatory structure and add-on laws,” he said. “Regulatory laws must be modernized.”