Massive rideshare scam: What you need to know

❗ Rideshare scam netted drivers millions

❗ A NJ man among those arrested

❗ Passengers charged inflated rates

A New Jersey man was at the heart of a rideshare scam that cost riders millions, according to the U.S. Attorney for the Eastern District of New York.

Carlos Arturo Suarez Palacios, 54, was arrested at his Brick Township home on Wednesday.

The FBI says Arturo Suarez Palacios and Eliahou Paldiel, 52, of Queens, New York operated a scam for nearly six years that allowed rideshare drivers to 'spoof' their GPS location and charge customers higher rates.

Investigators estimate the scam cost drivers millions in inflated prices and earned the drivers as much as $40 million in illegal pay.

The two scam artists who concocted this scheme may have made as much as $1.5 million, but perhaps much more, according to the U.S. Attorney.

How did the scam work?

According to the FBI, Arturo Suarez Palacios and Paldiel used "jailbroken" phones to bypass security updates and then installed an app that gives a fake GPS location.

They also installed an app known as "Screwber" that allowed drivers to select more lucrative rides.

Its alleged they sold as many as 800 of these tampered phones to rideshare drivers, who were then able to charge inflated rates to their passengers.

“Eliahou Paldiel and Carlos Suarez allegedly developed a rideshare application that fraudulently manipulated a driver’s GPS location to obtain unlawful surge fare pricing, defrauding customers and legitimate drivers," alleged FBI Acting Assistant Director in Charge Christie M. Curtis, "This alleged conspiracy offered an unfair financial advantage to more than 800 participants and disrupted the integrity of nationwide rideshare services."

The two also allegedly offered advice and instructions on how to use the hacked phones without getting detected by the ride share companies they worked for.

What is the Screwber app and how was it used?

According to the U.S. Attorney:

Screwber is an application developed by the defendants and others that provided Driver Co-conspirators with information about prospective rides that were not otherwise available to drivers prior to accepting such rides.

For example, Screwber enabled Driver Co-conspirators to obtain prospective riders’ destinations and approximate fares for prospective trips, thereby allowing Driver Co-conspirators to accept or decline the prospective rides based on information to which they were otherwise not entitled and, in turn, cherry-pick only the most profitable and lucrative rides offered to them.

Which rideshare companies were affected?

We don't know.

The indictment and news release from the U.S. Attorney does not specifically name which rideshare company (or companies) were involved.

They simply refer to "Rideshare Company-1" and identify it as "a multinational company headquartered in the United States that provides ridesharing services. It operates primarily through its smartphone application connecting users with drivers for on-demand transportation and delivery services."

The two largest rideshare companies, Uber and Lyft, have not commented on the indictment or indicated if any of their drivers were involved.

Will I know if I was affected?

In these types of cases, more details eventually comes out after the initial indictment.

It is also possible that drivers that used the jailbroken phones and participated in this scam could be identified and charged.

The number of riders effected is also not yet known, but it could be thousands.

For now, you have little recourse unless the rideshare company involved comes forward and offers compensation.

It is also possible that a class action lawsuit could be filed against the rideshare company involved once more details are known.

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