Each driver had been assigned a unique Lyft ID number that never changes. That allowed the Hell software to track each driver's habits including if they were driving for both Uber and Lyft, according to The Information.

The app was used between 2014 and 2016 to try and steal drivers from Lyft. Uber created fake Lyft rider accounts which tricked the system into thinking that these passengers were around different parts of a city. It meant that Uber could then see information of up to eight of its rival's nearest drivers per fake rider account.

Uber used a secret piece of software called "Hell" to spy on drivers for its rival Lyft, according to a report by The Information, as pressure continues to mount on the ride-hailing app after swathes of bad press.

The covert software would then send more ride offers to those who were driving for both services so that each driver would spend more time with Uber. And the drivers would also receive bonuses and special promotions for taking Uber rides. Hell data showed 60 percent of Lyft drivers were "double-apping" – driving for both firms – leading to Uber giving out tens of millions of dollars a week in bonuses, The Information reported.

Use of the Hell software ended in 2016, according to The Information's sources, roughly at the time Lyft closed a $1 billion funding round. Only a handful of people knew about Hell, including Uber Chief Executive Travis Kalanick, other executives and data scientists.

The Information cited law firms that had worked with Uber in the past as saying that the company could face a number of legal challenges. These could include breach of contract, unfair business practices, stealing trade secrets and violating the Computer Fraud and Abuse Act.

An Uber spokesperson has yet to respond to a request for comment when contacted by CNBC.

"We are in a competitive industry. However, if true, these allegations are very concerning," a Lyft spokesperson told The Information.

The latest revelations add to the growing number of scandals that have tarnished the reputation of the ride hailing service. It was recently revealed that it used software called "Greyball" to circumvent local law enforcement in some markets. It has since discontinued the app. Uber's Kalanick was involved in an incident where he shouted at an Uber driver, and more recently, the company's head of communications Rachel Whetstone is leaving the company.

Read the full report on The Information.