Uber has struck a deal with New York Attorney General Eric Schneiderman to restrict its use of surge pricing during emergency situations like natural disasters.
The deal, announced jointly Tuesday by Schneiderman's office and the popular car-hailing app, will be a nationwide policy.
— Eric Schneiderman (@AGSchneiderman) July 8, 2014
“This policy intends to strike the careful balance between the goal of transportation availability with community expectations of affordability during disasters," Uber CEO Travis Kalanik 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.”
The agreement follows a recent editorial penned by Schneiderman in the New York Times in which the attorney general raised concerns that Uber was violating state laws with a controversial price scheme that hikes up fares when demand is high.
In the last year, in bad weather, Uber charged New Yorkers as much as eight times the company’s base price. We are investigating whether this is prohibited by the same laws under which I’ve sued gas stations that gouged motorists during Hurricane Sandy. Uber makes some persuasive arguments for its pricing model, but the ability to pay truly exorbitant prices shouldn’t determine someone’s ability to get critical goods and services when they’re in short supply in an emergency.
In the past, Uber has repeatedly defended surge pricing as a way to maintain supply and motivate drivers to work during less than stellar conditions, mainly the weather.
During Hurricane Sandy, the company was the target of widespread criticism for implementing its high demand pricing system while New Yorkers struggled to commute with a hobbled public transit system.
Uber was forced to reverse course, announcing it would eliminate surge pricing in light of the storm and make up the difference out of pocket.
Tuesday's announcement also comes on the heels of the company reducing UberX fares in New York City by 20 percent -- a temporary discount they say makes it cheaper to use UberX than a yellow taxi.