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Uber Agrees To Limit Obscene Surge-Pricing During Emergencies & Natural Disasters
By
Rebecca Fishbein
Published Jul 8, 2014
Modified Jul 9, 2014
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By
Rebecca Fishbein
Published Jul 8, 2014
Modified Jul 9, 2014
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Yesterday, Uber announced it was slashing prices for its cheaper UberX cars. And today, the company has agreed to limit their insane surge pricing during "emergencies and natural disasters." One day the yellow cab will be but a memory, and humans will shuttle from one location to another at the whim of our Transformer-like UberLords.
Attorney General Eric Schneiderman announced today that Uber reached an agreement with his office to cap surge-pricing during "abnormal disruptions of the market." The e-hail application caused quite a commotion when customers complained about its massive price hikes during one of the city's million vicious snowstorms this winter.
The company argued that the increased fares, which can be as hiked as high as 8 times the normal rate, "get more cars on the road quickly when demand outstrips supply." But there were rumblings that the surge-pricing policy violated NY State's price gouging law, which prohibits vendors from hiking up prices during extreme events and disasters, hence the new agreement. It's also noteworthy that Lyft, a ride-sharing service that's something like Uber's hippie cousin, will reportedly be launching in Brooklyn and Queens on Friday, giving Uber a little more competition.
The new Uber agreement will apply to UberX, Uber Black, Uber SUV and Uber LUX, and will affect cars nationwide. Here are the details about qualifies as "abnormal disruption in the market," from the Attorney General:
New York’s law against price gouging (General Business Law §396-r), was passed in the winter of 1978-79 in response to escalating heating oil prices. It defines an “abnormal disruption of the market” as “any change in the market, whether actual or imminently threatened, resulting from stress of weather, convulsion of nature, failure or shortage of electric power or other source of energy, strike, civil disorder, war, military action, national or local emergency, or other cause of an abnormal disruption of the market which results in the declaration of a state of emergency by the governor.” During an abnormal disruption of the market, all parties within the chain of distribution of any essential consumer goods or services are prohibited from charging “unconscionably excessive prices.”
Uber does not set a single, fixed price for rides. Instead, its rates are dynamic, rising and falling with demand. Under its agreement with the Office of the Attorney General, Uber will set a cap on its pricing during “abnormal disruptions of the market” limited to the normal range of prices it charged in the preceding sixty days. In addition, it will further limit the allowable range of prices by excluding from the cap the three highest prices charged on different days during that period.
Note that "drunk outside Zombie Hut at 3 a.m." does not necessarily constitute a natural disaster, so that 3x surge-pricing's not quite dead yet.
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Rebecca Fishbein
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