For many, the choice between patronizing a traditional taxicab company or a ride-sharing app like Uber comes down to cost. And while it may seem upfront on the surface, it’s evident that Uber pricing shamelessly deceives both riders and drivers when examined more closely.
How Does Uber Pricing Work?
In most cities, Uber pricing is based on what Uber calls the “upfront fares” model. It factors in a base rate (which varies depending on your location/the vehicle you’re hailing), rates for the estimated time and distance of the trip and the current demand for rides in your area. Uber notes that your fare may increase a bit if the trip takes longer than expected. Simple, and fair enough.
However, people have noticed a striking disparity between riders’ and drivers’ Uber apps. After many trips, riders will be charged more than what drivers are being told their fare is.
An example to clarify: you take an Uber home from the bar. You’re charged $15.83, but the driver is told you were charged $13.63. Since the driver is paid a percentage of the fare, they end up losing money. You end up paying more. Uber pockets the difference. Not so upfront after all.
Above, we noted that Uber takes into consideration the demand for rides in your geographic location at the time you hail a car. The higher the demand, the higher the fare.
This is known as surge pricing. You’ll most often notice it during the holidays, since demand for rides increases considerably. While Uber is upfront about surge pricing (riders are notified that they’ll pay an inflated rate before the ride), it still reeks of price gouging. When you’re in desperate need of a ride, such as when you’ve had too much to drink or there’s a snowstorm, you’ll be charged a lot more money.
Traditional cab companies are barred from surge pricing, and with good reason: it’s a predatory, opportunistic practice. Nevertheless, the lax regulation that Uber faces despite offering virtually the same services allows them to get away with it.
Recent Examples of Unfair Uber Rates
NYC Class-Action Lawsuit
According to a recent class-action lawsuit, Uber, using their deceptive upfront pricing model detailed above, has been charging about half of New York City Uber riders with an extra $2 charge. With 250,000 daily trips, Uber pockets $250,000 daily, or $7.4 million per month, in hidden fees.
London Bridge Terror Attack
After facing criticism of surge pricing during a 2014 New York City snowstorm, Uber agreed not to inflate rates during emergencies. Their handling of the recent London Bridge terror attack says otherwise.
Three men rammed a large van into a crowd of people on London Bridge, then got out and proceeded to attack people with knives. At least seven people were killed and nearly 50 were injured.
During the ensuing pandemonium, Uber took their sweet time disabling surge pricing, only agreeing to refund riders after drawing a ton of criticism.
Ride-sharing is set to be legalized on Long Island on June 29. Make sure you keep this shady history of Uber pricing in mind before hailing one.