Uber may face criminal charges over "Greyball" app used to avoid regulators

Uber explained that the program is aimed at detecting people who use the service inappropriately.

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Uber Technologies Inc is now facing a federal inquiry by the US Department of Justice after using "Greyball", its own app that can help drivers avoid transportation authorities in areas it has no jurisdiction. According to a report, the firm may face criminal penalties once found guilty of using the app.

Two sources conversant with the use of Uber's Greyball have spilled some details about the illegal use of the software tool, Reuters said. Uber has owned up Greyball as it came out of an Uber program called VTOS, otherwise known as "Violation of Terms of Service".

Avoiding transportation authorities

Uber explained that the program is aimed at detecting people who use the service inappropriately. It has been legally used in countries outside of the US but it has not been disclosed that Greyball has the ability to help Uber drivers find and evade transportation authorities, specifically in areas where the company had not yet been permitted.

In March, the New York Times first reported that the software tool can be used in such a way which prompted a wave of backlash for the ride-hailing service. As of now, an Uber representative and the Justice Department refused to talk about the issue.

Criminal probe in progress

According to Reuters, one source revealed that a subpoena was already issued to Uber by a Northern California court in quest of documents showing how Greyball worked and which locations it was used. Given this development, a criminal investigation is now in progress.

This similar source also noted that Uber, through Shearman & Sterling LLP, has conducted its own internal probe with regards to the matter.

It remains uncertain at this early stage to determine if anyone at Uber will be criminally charged once the federal investigation finds the company guilty of improperly using Greyball.

However, in December 2014, Uber said it used the software tool because it was "deeply concerned that its driver-partners would be penalized financially", particularly in Portland, Oregon where the company was not yet allowed to operate.

This is not the first time that Uber faces a criminal probe as it already has pending business and legal battles.