EXCLUSIVE: Cabbies complain about kickback schemes - Hawaii News Now - KGMB and KHNL

EXCLUSIVE: Cabbies complain about kickback schemes

HONOLULU (HawaiiNewsNow) -

It's a scene that happens everyday in Waikiki.

A cab driver reaches into his pocket and hands a porter what one witness said is a payoff for steering a customer his way. 

The alleged payoff was filmed by a dashboard camera in the witness's car.

"Hey Jess, I just saw that guy give kickback," said the witness, a cab driver whose company's contract with the hotel is being circumvented by the alleged kickback scheme.

Hotel workers and cabbies call the practice "mahalo money." Receiving or paying these kickbacks for cab rides is illegal under city laws. But the law is almost never enforced.

"It is so prevalent and so quick, there's no communication needed. They just kind of wink, wink and it's done boom," said David Jung, owner of Eco Cab.

"I've sort of become numb to it, and that's the unfortunate thing. That's a reflection on how institutionalized and widespread this is."

Longtime cab driver Robert Deluze said he was in Waikiki two weeks ago when he was asked by a hotel worker to take a customer to the airport.

"He said you going to mahalo me and I said yeah, so what happened is we loaded the baggage in the car and he stuck his hand out and I shook his hand," Deluze recalled.

"I walked away and he said, 'what are you doing? You're supposed to mahalo me.' I said this is my mahalo and drove off. He was furious."

Hotel operators and hotel workers unions deny that kickbacks are commonplace, and said the practice only occurs at smaller, nonunion hotels. But many drivers disagree.

One cab company recently hired private investigators to document the practice. One of its investigators provided Hawaii News Now with a video of another alleged payoff on the sidewalk to one of Waikiki's largest hotels.

"It's a huge problem that's been going on. I've been driving 25 years now and it's gotten worse," said Deluze.

Honolulu's taxi industry is highly competitive and continues to face growing pressures from new players like Uber.

To keep a stream of steady business, some of the larger, more established taxi companies have negotiated exclusive or semi-exclusive contracts with the big hotels, often paying $10,000 a month or more.

Longtime drivers say the kickbacks are a way the smaller, independent cab companies get around those exclusive contracts and take rides from their bigger rivals. On airport rides, the kickbacks range from $10 to $15, or about a third of the fare.

"I would clearly estimate it in the tens of millions of dollars a year," said Eco Cab's Jung.

But many believe the ultimate victim is the consumer, who winds up footing the bill for the kickbacks in the form of inflated fares.

Jung and Deluze said that some unscrupulous drivers will take longer routes or will charge tourists excessive baggage fees to make up for the kickbacks.

Others will rig their meters or car tires to get higher mileage readings.

Those meters are tested annually by the state Agriculture Department. But some drivers will use larger back tires on their cars when their meters are tested by the state, driver said. They then replace those wheels with smaller tires or they deflate their back tires, so that the meters get higher mileage readings when they drive customers around, sources said.

"I've heard stories of people saying why are we going through tunnels (on the Windward side) which takes them around the long way," said Deluze.

"I get calls all the time why did (the other cab drivers) overcharge me. Why did it cost $80 to go to the airport, $70. It should never cost that much."

Deluze and Jung said hotels and the city should do better job of policing the practice.

"It's the culture of the business in Waikiki and that culture has to change," said Jung.

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