Today, Uber and the NY state Attorney General’s office announced an agreement that would cap the service’s rates during “abnormal disruptions of the market,” which mostly means during emergencies and natural disasters, in a way that is consistent with the state’s existing price gouging statute. Separately, Uber has established a nationwide price cap policy for emergency situations.
Under that law, any party involved in the chain of distribution of an essential consumer could or service is prohibited from charging “unconscionably excessive prices” as a result of “any change in the market… 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 such times, Uber has agreed to limits its drivers to charging the normal range of prices charged in the preceding 60 days. To prevent outliers from affecting this rate, the cap will exclude the three highest prices charged on different days during that 60-day period.
So if another flood came through and shut down NYC’s subway line again, an Uber ride that normally costs $10 would, in theory, not cost several times that amount just because people in need are willing to pay the higher amount.
It’s possible a subway strike, like the one that brought NYC to its frigid knees in December 2005, might also fall under this agreement. During that time, the city’s Taxi & Limousine Commission allowed cabs to pick up multiple fares, but also established temporary cost structures to prevent gouging.
“This agreement represents the thoughtful application of long-established law to new technology,” said NY Attorney General Eric Schneiderman. “It provides consumers with critical protections to which they are entitled under the law – and it provides Uber with clarity from government about how the law will be applied to its innovative pricing model. This agreement also serves as a model for the kind of effective collaboration that should exist between government and technology companies like Uber.”
Uber has also announced that, for all other markets, it has pledged to keep rates below the prices charged during the “3 highest-priced, non-emergency days of the preceding 2 months.”