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Call to cap Uber surge charges

Cape Town – An Uber customer has called on the transport business to cap its surge charge practice, with other users calling their dynamic pricing “exploitative”.

Fin24 user Irma Bisschoff said a cap should be implemented, after an outcry over New Year’s Eve bills, which skyrocketed up to 1000%.

This comes after actor Nicky Rebelo called for a nation-wide ban of Uber, after his son was taken for a R2800 ride on New Year’s Eve. In the story below, Uber gives its side of the story and how it attempted to educate the public.

Read: Uber expensive ride home angers dad

While Uber is not defined as a taxi business, its easy-to-use app is putting huge pressure on the industry. “I feel strongly that they should put a cap on taxi fares on special days like these,” said Bisschoff.

“A trip that would have cost us about R340 return ended up in costing us R800, which is crazy for anyone to pay, especially students. We only joined on December 31, so didn't get all their price notifications on the app or email.”

Uber notified customers and the public extensively ahead of New Year’s Eve, explaining in detail how to avoid high prices.

Growing call for Uber price cap

Criticism over the practise of surge charging is not new.

US politicians succeeded in ensuring Uber puts a cap on surge charges during times of crisis after an outcry from customers during Hurricane Sandy. Uber agreed to these conditions and said in future they would donate their 20% commission fee during times of crisis to the American Red Cross. But now politicians are seeking a cap on surge charges at all times.

In Sydney, Uber refunded its customers fleeing the Sydney hostage in December 2014, after a Twitter PR nightmare.  

Economists support Uber

Most economists support surge charging, as it fits into economic theories, such as the Laffer Curve.

"From an economists’ point of view all of this shows that surge pricing is working just perfectly," Tim Worstall wrote in his opinion piece on Forbes. "Exactly as it should and precisely as it is designed to do."

Proponents of surge charging compare it to petrol price increases and inflated prices of hotels and flights during peak season.

Ilya Somin wrote a blog on Washington Post, explaining that “before Uber surge pricing can start to benefit from status quo bias, it has to survive long enough to begin to seem normal. That may not happen if protestors get their way, and government forces the firm to abandon surge pricing before it becomes well-established.”

Some economists had this warning:

“With regular day-to-day decisions, consumers like predictability and don’t like to see prices change,” Dirk Bergemann, a professor of economics at Yale, told the New York Times. “People are trained that there is a level of predictability with purchases.”

“If you’re a pure economist and following the laws of supply and demand, the argument is that if someone is willing to pay a price, then it is not excessive,” Liran Einav, an associate economics professor at Stanford, told the New York Times. “But that all depends on the type of long-term relationship you want to build with your customers.”

Uber is ‘exploitative’

Fin24 user Lizelle Illingworth said for a 35km trip from La Lucia to Ballito on New Year’s Eve, she paid R412 for her trip at 20:08 and R1 882 for her return trip at 03:12.

“This is pure exploitation as the surge mentioned in their quote was non-existent.  We had a driver reach us within three minutes. I think this is ludicrous ... we could've booked a return flight to Johannesburg for that price!”

Fin24 user Ernie van Biljon said he had no problem paying extra over public holidays, “but to charge 10 to 12 times the normal rate is blatant theft and to hide behind the excuse that these rates are advertised up front is an extremely lame excuse!”  

“If you have had a few too many, your objective is to get home safely and you do not really consider the cost rationally - and this is being exploited!”

“The theory is good but the practice is sick. Fair is fair, but abusing people will eventually hurt you.

“Apart from the cost, the competency of the drivers would also worry me, because you have to have a PDP (for what it is worth) and proper insurance to carry passengers for money, and I'd like to know if the drivers comply with that requirement. Or is there a loophole again?”

‘Taking advantage’

Fin24 user Dustin Botha was charged R4 000 for a 28km trip from Clifton to Big Bay (R142/km). “This is completely ridiculous! I understand surcharges when times are busy, but charging such inflated rates and not showing an amount upfront I feel is wrong and misleading.”

Fin24 user Thandie Dowery paid R261 at 22:43 to get from Glengariff to Buitengracht Street (a 2.5km trip normally costing R24-R32). “Had I'd known this figure before, I would have rather just taken my car. On my return, I was billed R287 from Long Street to Glengariff. What would normally be a R26-R30 (3.5 km) ride.”

“Even if I knew the fare, what was I to do? Be stranded as a woman in the Cape Town CBD? Flag cab after cab knowing full well they are all engaged? I see Uber as extortionists, really...”

Fin24 user Nic Breytenbach said: “They take advantage of a situation where people are desperate and vulnerable. It’s is nothing less than extortion.”

Fin24 user Oscar Apleni took a 30km ride from Midrand (14th Road) to Johannesburg (De korte Street). He was charged R397 at 22:30, but returning at 03:30, he was charged R1 769. “It's so ridiculous, plus it was my first time using Uber.”  

Fin24 user Michael Maclachlan said Uber should reconsider its pricing model. “I was also a victim of Uber-demand pricing on New Year’s Eve. As a new user I was unaware of the potential astronomical rates that one can be subjected to until it was too late (ie wanting to get home after a night of celebrating) and I had no choice as I needed to get me and my family home.

“For Uber to blatantly charge 3, 5 or 12 times the economical rate to provide a service and use the excuse of getting more cars on the road is unacceptable. I for one will definitely be reconsidering and using alternatives to what is otherwise a great system.”

‘We move together’

Meanwhile, Uber posted an informative graphic showing how New Year’s Eve revellers move together.

“What happens when millions of people come together on one night looking for safe, reliable rides? We learned that in many ways, we all move together. From Cape Town to Paris to San Francisco, we all celebrate in similar ways: from when we head out to celebrate, to when we head home (except for the late-night partiers in Paris).”

The stats:


How surge charging works:




* Do you have a similar story to tell or do you have ideas that could improve the way Uber works? Let us know now.
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