Uber E-Hailing Ride Service Accused of Gouging For Trying to Keep Drivers Working


Uber, market leader with a variety of ride services available via smartphone app, has gotten a surge of bad publicity lately over its "surge pricing" policies–a (much) higher surcharge over typical fares. It hikes prices during bad snowstorms, and pissed off New Yorkers for it, with a $94 fare for a two mile, 11 minute trip over this snowy weekend. It also does so during rush hour, and pissed off an Angeleno for it with a $357 fare for a 14 mile, 49 minute trip.

Company policy is to inform riders that surge pricing is in effect before rides are taken, though in the case of the L.A. fare mentioned above, the passenger claims she wasn't warned–a claim Uber disputes. Since Uber drivers only work when they decide they want to work, the surge pricing is largely designed, Uber claims, to keep drivers on the road during times when they might be likely to think the standard fares aren't worth the trouble for them.

It's an attempt to adjust supply to demand under changing circumstances. It will doubtless never satisfy everyone and for sure is going to result in retroactive regret on the part of some passengers, which isn't good for Uber. It's especially not good when it becomes a national Internet meme about how awful your prices are.

That said, Michael Hiltzik at the Los Angeles Times hits on what will likely be the thing to "discipline" Uber if it needs discipline: competition:

One other factor tends to limit gouging: fear of consumer rage. That's a fear Uber hasn't yet acquired, perhaps because it doesn't think it needs to. At the moment it's the big cheese in ride-sharing and its typical clients can afford to shoulder the surge (or charge it to their expense accounts), griping all the way. But what happens when its reputation for caring nothing about customer relations starts biting back, as it surely will some day? There's always room for a rival billing itself as a "kinder, gentler Uber," and this weekend may just have given some clever entrepreneur an idea.

I wrote about Uber and other such e-hailing services (such as Lyft, an already-existing competitor to part of Uber's model) upending the hired driving industry back in October as California became the first state to try to regulate them.

Reason TV on Uber and other ride services v. city governments: