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Post date: July 8 2014

A.G. Schneiderman Announces Agreement With Uber To Cap Pricing During Emergencies And Natural Disasters

Uber To Implement New Formula Limiting Prices To Normal Range During Emergencies

New York Agreement To Serve As Model For National Policy

Schneiderman: This Agreement Represents The Thoughtful Application Of Long-Established Law To New Technology

NEW YORK – Attorney General Eric T. Schneiderman today announced an agreement with Uber, a mobile application that connects riders with for-hire vehicles, to limit prices during “abnormal disruptions of the market” – typically, emergencies and natural disasters -- consistent with New York’s price gouging statute.  In addition, Uber is expected to announce a national policy to limit pricing in emergencies that is based on this agreement. 

“This agreement represents the thoughtful application of long-established law to new technology,” said Attorney General Schneiderman.  “It provides consumers with critical protections to which they are entitled under the law – and it provides Uber with clarity from government about how the law will be applied to its innovative pricing model.  This agreement also serves as a model for the kind of effective collaboration that should exist between government and technology companies like Uber. I am particularly proud that Uber is adopting a similar policy nationwide.”

Travis Kalanick, C.E.O. and co-founder of Uber, said, "This policy intends to strike the careful balance between the goal of transportation availability with community expectations of affordability during disasters. Our collaborative solution with Attorney General Schneiderman is a model for technology companies and regulators in local, state and federal government." 

New York’s law against price gouging (General Business Law §396-r), was passed in the winter of 1978-79 in response to escalating heating oil prices.  It defines an “abnormal disruption of the market” as “any change in the market, whether actual or imminently threatened, resulting from stress of weather, convulsion of nature, failure or shortage of electric power or other source of energy, strike, civil disorder, war, military action, national or local emergency, or other cause of an abnormal disruption of the market which results in the declaration of a state of emergency by the governor.”  During an abnormal disruption of the market, all parties within the chain of distribution of any essential consumer goods or services are prohibited from charging “unconscionably excessive prices.” 

Uber does not set a single, fixed price for rides. Instead, its rates are dynamic, rising and falling with demand.  Under its agreement with the Office of the Attorney General, Uber will set a cap on its pricing during “abnormal disruptions of the market” limited to the normal range of prices it charged in the preceding sixty days.  In addition, it will further limit the allowable range of prices by excluding from the cap the three highest prices charged on different days during that period.  

Uber is expected to propose a similar change to its pricing model nationwide.  

The agreement announced today will apply to all Uber services that use dynamic pricing, including UberX, Uber Black and Uber SUV.

This matter was handled by Marty Mack, Executive Deputy Attorney General for Regional Offices, and Gary S. Brown, Assistant Attorney General-in-Charge of the Westchester Regional Office.

A copy of today’s agreement can be found here