Too many companies are using AI to exploit customers through surveillance or surge pricing. Kroger, Wendy’s, Instacart, Delta, and JetBlue are just a few examples of companies that have been caught using some version of it. Earlier this year, Maryland became the first state to ban surveillance pricing. Other states are looking to follow suit.
Ride share companies have long used surge pricing to charge higher fees during peak times. Last year, former FTC chair Lina Khan revealed that these companies also engaged in predatory practices like charging higher rates based on users’ cell phone battery percentages. Consumer Reports, which broke the news about Instacart’s sketchy pricing practices, turned their focus on Lyft and Uber. An investigation revealed that this went well beyond surge pricing. Here’s more from NBC News:
A Consumer Reports investigation released Tuesday found that Uber and Lyft riders often see different prices for the same ride, even when they request it at the same time, along the same route to the same destination.
These price differences may be familiar to Uber and Lyft users who have compared fares with someone else. But the new report found the discrepancies can be dramatic.
Derek Kravitz, the lead author of the report, said that Uber and Lyft have access to a huge amount of customer data within the app and that this information could be used by the companies to predict what a customer might be willing to pay.
“We found that they have the capabilities to look at a lot of different things, namely how you interact with the app, how accurately or fast you type an address … whether or not you’re going to a daycare to pick up a child,” said Kravitz, who analyzed the ride-hailing apps’ privacy policies and patent filings.
Consumer Reports could not determine whether any of these specific factors were used to calculate fares, however.
Across the rides tested by Consumer Reports, the median gap between the lowest and highest quoted fare for the same trip was a whopping 50%.
A 50% difference in price for the exact same ride is wild, but believable. I recently needed to use a rideshare app for five people to go approximately nine miles from a restaurant to a hotel. My phone battery was around 30%, so I was already wary that I’d be charged more. I checked the prices on both Uber and Lyft, and Lyft came back $14 cheaper. At the time, I thought it was just a promo thing to get me to use them over Uber. After reading CR’s findings, I’m now wondering if Uber was trying to charge more based on the data they had on me, rather than Lyft offering a discount.
Consumer Reports’ findings are worth the read. They are out there doing the Lord’s work, and I hope their results get a lot of attention. Instacart was forced to address its predatory pricing after CR’s report. To me, the craziest finding was that the big price differences between the ride share app test subjects were impossible to predict. There needs to be more pricing transparency. Consumers have the right to know why companies are charging what they do.
Photos credit: Roberto Hund, Dursun Yartaşı, David Kwewum on Pexels, Paul Hanaoka, Charles Deluvio on Unsplash
The journalists at A More Perfect Union have also been spotlighting dynamic pricing shenanigans in the rideshare & grocery delivery apps like Instacart. The computing power needed for this is linked to the exploding development of data centers across the US. It isn’t just about storage for your SM posts, IG photos & YT videos, it’s about mining your data to bleed every last dime out of your pocket so more VultureCapitalists can join Musk in the Trillionaire’s Club.
I was a pretty regular Instacart user before the predatory pricing was revealed by Consumer Reports. I just completely stopped using it after that. Pity, because it was a convenient service.
Yeah. I used to love, love, love Instacart, too. End stage Capitalism is getting worser and worser and worser. I can’t remember the city, but a downtown area removed cash as an option to pay for parking and the app the city chose based your charge to park on how much battery your phone had. We are being tracked and spied on every minute of every day and most of us have no clue. Big brother is watching. Everything is a scam designed to rip you off. Eat the rich, tax the billionaires out of existence and f the patriarchy.
Yikes, thanks for the heads up.
I was just in Williamsburg, Virginia for an educational conference and needed to get back to the Richmond airport to fly home. I log into my Uber app and select my ride, $54, and I wait for a driver to get assigned to me. 8 minutes later, nothing. So, I have to try again. My only option…now $200. G-D surge pricing. Thankfully, I was able to scrounge up 2 other people in the hotel lobby needing to go to the same airport and we split the cost. Enraging!
The article says that the median gap between high and low fares was 50%. That means that half of the time, the gap was actually more than 50%. This is so much worse than you’re giving it credit for.
I’m sure Lyft has their own set of issues, but for what it’s worth, I have exclusively used them for years since asking a number of drivers who drive for both if they had a preference, and the answer was unanimously Lyft for treating them better.
ugh
I live in rural area about hour from airport. Thankfully, now have deal with local driver where we call him + pay directly!
RE Instacart – I’ve become a Walmart shopper since their Instacart prices are same as their store-prices. Sometimes I use Instacart and sometimes just do $35-minimum delivery direct from the store.