Finally. Uber has entered an agreement with New York Attorney General Eric Schneiderman to limit rate increases during emergencies to comply with price gouging laws introduced in 1979. The press release from Schneiderman’s office claims that the company will introduce similar rules nationwide, which means it might finally stop exploiting natural disasters for fun and profit.
Pando hasn’t been quiet in its disdain for Uber’s decision to capitalize on hurricanes, winter storms, and other natural disasters by increasing rates in an ostensible effort to get drivers on the road despite the risk. As Paul Carr wrote after Hurricane Sandy struck in November 2012:
Uber’s fare doubling had nothing at all to do with getting drivers on the road — and everything to do with getting those drivers on to Uber. Drivers who knew they could probably get far bigger tips by taking private jobs (Uber’s tip to drivers is fixed at 20 percent) needed to be convinced to sign on to Uber. Otherwise all those fares were going straight to the drivers and Uber wasn’t getting a dime!
Hurricane Sandy didn’t mark the last time Uber took advantage of inclement weather — that’s my entry for “understatement of the week” — by raising its prices. The company also increased its rates by as much as seven-or eight-times the usual during a snowstorm in December 2013. There were numerous rate increases due to some form of precipitation in between those two examples, but those are the most striking for their insanity and the sheer size of the fare hike.
Uber won’t be entirely removing surge pricing during emergencies. Here’s how the changed policy will work, according to the press release issued by Schneiderman’s office earlier today:
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.
Uber is expected to propose a similar change to its pricing model nationwide.
So the company will still be raising prices during natural disasters, but it won’t be taking full advantage of the situation by raising its prices as much as it did during that snowstorm. It’s not a complete victory — some might have expected Uber to nix surge pricing completely, at least during emergencies — but it’s a step forward from the company’s previous practices.