Councils investigate e-scooter operator Beam’s alleged ‘audacious scam’

A whistleblower has accused micromobility rental operator Beam of manipulating monitoring software to exceed the number of e-scooters it is allowed on the streets of numerous cities – thereby skirting caps put in place for public safety and public nuisance reasons, and depriving councils of thousands or even “millions” of dollars in revenue.

In the case of Auckland, Beam is accused of going 300 scooters beyond its 1200 limit.

Although the allegations were first published in the media yesterday, the whistleblower previously sent documentation to councils on both sides of the Tasman. Five are reportedly investigating.

“Auckland Council has investigated allegations relating to Beam’s compliance with the device limits set out in their micromobility licence,” environmental health manager Mervin Chetty said.

“We have presented our findings and concerns to Beam and received a response on Friday afternoon. We are currently reviewing this before determining next steps.

“Once the review is completed, we will be making a decision on what action to take, which could include whether to cancel or suspend Beam’s licence under clause 18 of the Auckland Council Public Trading, Events and Filming Bylaw 2022, and clause 43 of the Auckland Transport Activities in the Road Corridor Bylaw 2022.”

He would not detail the findings while the process was still under way.

Meanwhile, Wellington City Council is looking into the whistleblower’s allegation that Beam deployed 100 more scooters above its cap in the capital. “We are investigating and auditing Beam and we’re comparing notes with other councils,” a spokesman said.

Beam is denying the allegations.

“We emphatically reject any suggestion that this was a ‘scheme’ to deprive councils of shared revenue,” Alan Jiang, chief executive of the Singapore-based Beam said in a statement to the Herald.

The CEO said Beam had inadvertently exceeded its limits at times as it sought to keep a useable number of e-scooters on streets. He apologised and said his firm was willing to enter negotiations with councils for a commercial settlement.

Beam is accused of manipulating monitoring software in order to boost its numbers and profits. Photo / Michael Cunningham

An independent audit and staff training would take place.

Supporting their claims with leaked Slack conversations and emails, the whistleblower told the Weekend Australian that Beam had deliberately “cooked up” a scheme to get “an additional 1500 vehicles over cap” to generate thousands of dollars in extra revenue per day.

One Beam message on the initiative, dubbed “Running hot project”, detailed “incremental deployment targets” beyond the set limits, as monitored by various councils using a piece of third-party software called Ride Report.

In Auckland, where Beam’s licence restricts it to 1200 e-scooters (or 1400 including a new seated model), the “requested space” between RR [Ride Report] and DV [deployed vehicles] is 300.

In Wellington, 100 extra e-scooters were requested.

A 2023 NZ Transport Agency Waka Kotahi (NZTA) report says a council’s revenue share from e-scooter operators varies by contract but can involve a 1% to 3% clip of the ticket on each ride. Beam charges $1 to unlock a scooter then 49c per minute.

Wellington City Council charges Beam a flat 11 cents per trip, a spokesman said.

Auckland Council charges Beam a set annual fee per device per year, which varies by zone – with an annual charge of $162 per two devices in the CBD, $98 per two devices in inner suburbs and $22 per two devices in outer suburbs. (The “two devices” framing is set because fees are based on square metreage, and two e-scooters take one square metre.)

The council is primarily focussed on the possible public nuisance and safety elements of the alleged breach, the Herald understands. But The Weekend Australian says the combined revenue allegedly lost by Australian and New Zealand councils could run into the millions.

‘We have been running 20% over cap’

One alleged internal Beam message read, in part: “Auckland no on street change (we have been running ~20% over cap; no immediate intentions to go higher, waiting for optimisation to bring us down to the right level’... Wellington small on street change (running +50 for a little while, moving to +50 ASAP).”

Beam’s Jiang said there was an explanation: his firm put extra e-scooters on to streets because “on any given day, a not-insignificant number of vehicles are unusable due to theft, misplacement or [being] outside of the geo-fence range”.

“Our intention was to ensure there were an adequate number of usable vehicles available to the public within the limits of the agreed terms with councils and Ride Report’s system,” Jiang said.

“However, as a result of this approach, there have been instances where we have exceeded the vehicle allocation.”

‘Deeply apologetic’, prepared to negotiate commercial settlement

Jiang added: “While this was never our intention, it is something that we take seriously and are deeply apologetic for. We understand the importance of our social licence in our key markets and recognise that we need to do better in the future to meet the high standards our partners set for us... We are committed to a full and thorough revision of our processes to ensure this does not happen again.”

He said an independent auditor would be hired to review Beam’s operations. “We are prepared to negotiate a commercial settlement with any councils affected for any issues around non-compliance with our licence.”

Rideable scooters allegedly marked ‘unrideable’ for monitoring app

According to the Weekend Australian’s summary of the leaked emails, Beam president Deb Gangopadhyay emailed his team on April 17 last year, pitching a “risk-taking” initiative to increase deployed ­vehicles in cities by “adjusting” the definitions of publicly reported data provided to Ride Report – the app used by councils to monitor if operators are staying within their cap.

“The value could be quite high and immediate,” Gangopadhyay told his colleagues, estimating the number of deployed vehicles could be hiked by up to 20% with “high certainty”, according to the paper.

Gangopadhyay suggested some operational vehicles could be marked as unrideable, unknown or having a low battery – so they don’t appear as “available” on the Ride Report app used by councils to monitor scooter limits, the Weekend Australian said.

In another email on May 29, Gangopadhyay wrote that marking scooters as “unknown” is “promising in that it seems to remove vehicles altogether from Ride Report”, but he warned if a lot of “unknown” vehicles are being ridden by customers, “that might be a yellow flag”, according to the Weekend Australian’s summary.

He suggested that some scooters could be marked as unknown if they had “no ride for x hours” and he asked whether a Ride Report executive would be “supportive of us having definitions that help us deploy a little more?”, according to the paper.

Ride Report responds

“In the last two weeks, Ride Report staff was made aware of concerns related to Beam creating data in a way that is inconsistent with the international standard for shared scooters and bikes,” Ride Report’s North Carolina-based CEO Michael Schwartz told the Herald.

“Once councils told Ride Report of these concerns, staff immediately reviewed historic[al] Beam data in all markets where Ride Report has data. Fortunately, the data-driven approach taken by most councils in Australia and all in New Zealand meant Ride Report had stored a digital paper trail of Beam’s activities, so staff were able to quickly identify patterns within the data that are consistent with the concerns cited in your email [detailing the allegations surfaced in the Weekend Australian].”

“The entire shared micromobility ecosystem will learn from this, and Ride Report is already taking steps to make this type of activity harder for operators to implement in the future,” Schwartz said.

Auckland Council to choose new licensees by November

The incident comes at a crucial time for Auckland’s incumbent e-scooter rental operators: Beam, Lime (whose major financial backer is Uber) and newcomer Ario.

A new two-year licence period begins on November 4, with various operators vying for a place for the next two-year period.

Beam was first awarded an e-scooter operating licence in 2020, along with the homegrown Flamingo and Lime (whose e-scooters were ordered off Auckland streets over a safety issue in 2019. However, Lime regained a spot after it merged operations with licence-holder Jump; both companies shared the same major investor – Uber).

The 2022 licensing round saw Flamingo lose its spot, with Beam and Lime named as the only two operators.

In June, the Singapore-owned Ario was granted a four-month licence for its e-scooters, which can be riderlessly parked by a remote operator. Ario is applying for a full licence for the next two-year period.

Who is Beam?

Beam was founded in Singapore in 2018 by Alan Jiang and Deb Gangopadhyay - both since named to the consumer technology section of the Forbes Asia 30 Under 30 list.

Today it operates e-scooters and e-bikes in 60 cities around Asia Pacific.

In a statement released on April 30 this year, the privately-held firm said, “Beam saw a 36% increase in gross revenue from 2022, to a record US$53 million in 2023.”

In the second half of 2023, “Beam achieved a significant milestone by reaching adjusted ebitda profitability; signifying the company’s ability to translate its impressive growth into a sustainable business model.”

The firm was “on track for full-year double-digit profitability in 2024″.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.