San Francisco had one of our standard Uber-hating hissy fits back in April of this year when Uber was served a lawsuit claiming that claimed Uber engaged in a scammy fare manipulation scheme that showed riders higher fares than drivers, with Uber underpaying their drivers and pocketing the difference. Now, an Uber executive has completely admitted to this on the record in an interview with Bloomberg, explaining that it’s all part of Uber’s new “route-based pricing” model that in some ways sounds even shadier than the alleged fare manipulation scheme.
In words that ought to win the Pulitzer Prize For Truth In An Individual Sentence, Bloomberg Technology’s Eric Newcomer writes that “After months of unsatisfying answers, Uber Technologies Inc. is providing an explanation: It’s charging some passengers more because it needs the extra cash.”
In speaking with Uber’s head of product Daniel Graf explained that not all riders were being charged a different fare than the driver was being shown — only riders on higher demand routes were getting the increased fare. Route-based pricing is sort of like another algorithmic version of Uber’s surge pricing, except the price spikes are applied to areas with higher demand and where riders might be willing to pay more.
The Bloomberg interview, rather understandably, elicited a response that Uber was targeting wealthier patrons and charging them more, and that rides in wealthier neighborhoods were being made more expensive. Uber quickly issued a statement to several media organizations attempting to clarify the matter.
“We price routes differently based on our understanding of riders’ choices so we can serve more people in more places at fares they can afford,” Uber said in a statement to the San Francisco Examiner.
In his Bloomberg interview, Graf does not deny that Uber showed different rates to drives and riders for the exact same rides. He’s also pretty clear that Uber is indeed pocketing the difference. That may help Uber in its attempt to stop racking up $3 billion a year in losses, as it did in 2016. But it probably won’t help them in the class action lawsuit that alleges riders and drivers were shown different fares, because Uber has completely admitted they were doing this.