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Uber Agrees to Cap Pricing During Disasters, Emergencies

Ride-sharing service Uber Technologies Inc. reached an agreement with New York Attorney General Eric Schneiderman to limit its pricing tactics by capping fares during emergencies and natural disasters.

The San Francisco-based startup, which allows people to order transportation with smartphones, agreed to limit pricing during “abnormal disruptions of the market” under an accord signed today, the attorney general’s office said. The company implemented a similar policy throughout the U.S., it said in a blog post.

Unlike traditional taxis with fixed fares, Uber’s prices vary depending on demand, occasionally creating sticker shock for customers at busy times such as New Year’s Eve. Schneiderman said in April that his office was investigating the service for charging as much as eight times its base rate during storms in New York. Governor Andrew Cuomo declared states of emergency during several winter storms in January, February and March.

The agreement is a “thoughtful application of long-established law to new technology,” Schneiderman said today in a statement. It “serves as a model for the kind of effective collaboration that should exist between government and technology companies like Uber.”

The service has spread rapidly to cities around the globe since its founding in 2009 and was valued at about $17 billion under a financing deal in June. Along with criticism over its pricing model, the company has faced regulatory hurdles over safety concerns and protests by taxi and livery cab groups who claim it competes with them unfairly because it is not subject to the same rules.

Pricing Balance

The rate-capping policy strikes a “careful balance between the goal of transportation availability with community expectations of affordability during disasters,” Travis Kalanick, Uber’s co-founder and chief executive officer, said in a statement. “Our collaborative solution with Attorney General Schneiderman is a model for technology companies and regulators in local, state and federal government.”

Under the New York accord, which applies statewide, Uber will not exceed a “normal” range of prices in situations where states of emergency are declared such as during severe weather, blackouts, strikes or other events. The range would be based on prices charged during the 60 days prior to the emergency, according to the agreement.

The policy nationwide will follow a similar model, according to Uber’s blog.

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