A "life-threatening" storm that is forecast to dump as much as two feet of snow from New York to Boston is a chance for Uber Technologies Inc. to show it has learned from past mistakes.
Uber, a mobile application that lets people book cars using their smartphones, said it will limit price surges to 2.8 times normal rates during the storm. The company reached an agreement with New York's attorney general last year after being criticized for exploiting crises for profit during several such events — including Hurricane Sandy, which hit the East Coast in 2012.
"Dynamic pricing will be capped and all Uber proceeds will be donated to the American Red Cross to support relief efforts," the San Francisco-based company said Monday in an e-mailed statement. The company later told users that "prices will not exceed 2.8x the normal fare."
Rival ride-sharing app Lyft Inc. said that its service pricing during periods of high demand is capped at 200 percent of normal rates, "as always."
"Demand may not even push prices that high, but the cap is there so rides during busy periods remain affordable," Lyft said in an e-mail to users and drivers.
State of Emergency
Snowfall on the East Coast began on Monday morning, and New York Governor Andrew Cuomo declared a state of emergency, saying New York City's subway will be limited after 7 p.m. and MetroNorth and Long Island Rail Road might close at 11 p.m. Thousands of flights were canceled. On Twitter, Cuomo said the state is considering a travel ban on all main roads starting at 11 p.m.
"We expect to have a serious problem on our hands," New York City Mayor Bill de Blasio said at a press conference on Sunday. "We are facing one of the largest snowstorms in the recorded history of this city."
At 8:30 a.m. New York time, one Uber user tweeted a screen shot from his iPhone that showed Uber pricing — which usually fluctuates based on demand — at 2.9 times regular rates. Prices soon dropped to normal.
"Price gouging in the context of an emergency is illegal," de Blasio said at a press conference Monday, encouraging users to report the practice to the Taxi & Limousine Commission.
Cuomo encouraged residents to work from home if possible, and advised those who can't to use mass transit.
Pricing Criticism
Uber says that simple supply and demand drive its surge-pricing algorithm, and it is seeking a patent for the technology. The company says the feature is useful to encourage drivers to respond to increased requests during peak hours, in inclement weather and on holidays.
During a hostage crisis in Sydney in December, in which a gunman held occupants in a cafe for about 17 hours, Uber's surge pricing model kicked in based on an increase in demand. That spurred outrage among some in the international community who took to social media to criticize the company.
Days before the Sydney scandal, Uber charged users a premium during the San Francisco Bay Area's "Stormageddon," also prompting aggravated consumers to vent on Twitter. Seeking to pre-empt more outrage, Uber warned users of guaranteed surge charges on New Year's Eve, sharing a time-based graph on its blog that showed when prices would be highest.
(An earlier version of the story was corrected in the second paragraph to show Uber is limiting price surges, not suspending them.)
To contact the reporters on this story: Alexandra Mondalek in Detroit at amondalek@bloomberg.net; Serena Saitto in New York at ssaitto@bloomberg.net
To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Jillian Ward
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