JERUSALEM (Reuters) - Uber faces a legal challenge in Israel, adding to the list of places where it is under scrutiny, after the country alleged unauthorized drivers were illegally paid using its network for a new car pooling app the company is piloting.
Israel's Transportation Ministry said on Wednesday an undercover investigation had found Uber recruited private drivers to operate the network without the necessary licenses, and that Uber took 25 percent of the cost of each ride.
Uber, which said it was operating within Israeli rules, is running a pilot of UberNight in Tel Aviv where it says passengers only pay to help cover the expense of the ride. Google (NASDAQ:GOOGL)'s Waze set up a similar service for commuters in 2015.
But Israeli regulations, in a bid to protect taxi drivers' income, forbid non-authorized drivers from earning money while ferrying passengers around which means services like Uber and Gett are only allowed to use licensed taxi drivers.
Uber and six private drivers now face charges for not having proper business license, the proper operating license and transporting paying passengers, the ministry said.
But Uber said in response that its pilot program was created in accordance with Israeli regulation and was similar to other applications that operate with the goal of covering costs.
"Passengers and drivers in Israel are already enjoying UberNight at hours when transportation options are limited," it said in a statement.
"Uber is committed to continuing to lower the fare costs in Israel."