Uber predicting New Year’s Eve surge in customers and prices

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DENVER --   New Year’s Eve 2014 may be Uber’s busiest night of the year and most expensive.

The ride sharing service has been accused of gouging customers on high demand days with its “Dynamic Pricing” model, where fares surge based on peak demand.

Uber expects two million riders worldwide on New Year’s Eve but Denver’s Devon Barker won’t be one of them.  “Don`t bother with Uber, rent a helicopter, “ said Barker.

That was Barker’s sarcastic response after he was emailed a receipt for $85.00 on Halloween night for a four and half mile ride.  “An average cab fare from the Highlands to Governor`s Park is $25.00 at the max, maybe $20.00,” said Barker.

His bill was small compared to former Uber customer Robert Cain, “$744 for what was about a 30 minute ride.  I mean we could`ve gone to France for that amount of money, right?”

Cain and some friends grabbed an Uber SUV after a concert in Broomfield.  His Halloween trip to Louisville went 18 miles because the driver missed an exit.

“I know you can hide behind your business model and your policies, for sure you can do that, but tell me that you feel good about charging $744 for what should`ve been a four mile trip?” asked Cain.

Uber offered to cut his bill nearly in half but Cain says he still won’t use the company again.  Cain believes Colorado lawmakers should impose a cap on how much Uber can charge.  The ride sharing company successfully lobbied against that in Senate Bill 125.

“The rules are the  rules and the rules are the prices are deregulated,” said Will McCollum, Uber’s Colorado General Manager.

McCollum said Uber’s phone app uses algorithms to decide pricing based on supply and demand, “Dynamic pricing, otherwise known as surge pricing is all about reliability.  At the end of the day we want to make sure that drivers are receiving market rates for the services that they`re providing.”

The Uber App warns customers when dynamic pricing is in effect.

A bubble  pops  up on a user’s phone screen that may say current rates are 6.25x higher than normal to maintain availability.  But some customers complain they didn’t understand that meant the normal fare was being  multiplied by the X factor.

Devon Barker remembers his app saying 8.4x but he doesn’t remember a fair quote.   “I thought it meant they were adding $8.00 dollars to the end fare.  I thought that`s fine, I`m fine with 8 dollars but I didn`t know it was being multiplied times 8, shocking!”

Customer Rob Cain had a similar reaction after being emailed a receipt for a fare with a 6.9x  surcharge.  “I was thinking $200.00  tops, $250.00 even no big deal, $744.00? Just blown away!”

State Senator Cheri Jahn helped write Colorado’s Uber legislation and was shocked when she learned how much some customers had been charged, “That is mind blowing to me.”

The Wheat Ridge Democrat says she’s not ready to revisit S.B. 125 just yet but she says if Uber doesn’t improve its transparency, she might.

“Surge pricing is nothing  new,  I get that nobody has been more free market than I have but we also have to have consumer protections," said Senator Jahn.

Uber announced it’s  emailing all of its customers about dynamic pricing, promising fare estimates before anyone clicks yes.  It’s also posted a blog at http://blog.uber.com/NYE2014 warning customers when prices are likely to be highest (between 12:15am-3 am) on New Year’s.

Despite its critics, Uber continues to grow its presence.  The company operates in four times as many cities as it did last year, 260 up from 66 last year.

On New Year’s Eve the ride sharing company will donate one dollar from every ride to Mothers against Drunk Driving for customers who enter the promo code “MADDNYE.”

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