On July 3, 2024, U.S. Senator Sherrod Brown (D-OH), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, called for transparency from Uber and Lyft regarding their use of surge pricing to set fares. In letters addressed to the CEOs of both companies, Brown expressed concern over frequent and opaque price changes and diminishing competition in the ride-hailing market.
“Using algorithms to set prices, including dynamic pricing, abuses consumer data and suppresses competition, making prices unpredictable and taking away people’s ability to find the lowest price,” Brown wrote. “Under these shifting conditions, fare rates are highly volatile, making it difficult for consumers to predict how much they will pay for a given ride.”
Brown emphasized that transportation costs are among Americans' largest necessary expenses after housing. He criticized the increasing reliance on dynamic pricing or surge pricing by transportation-related companies as a threat that could drive prices even higher without improving service quality.
In his letter to Uber CEO Dara Khosrowshahi, Brown highlighted concerns about how Uber's dynamic pricing algorithm adjusts rates based on various factors such as time and distance of the route, traffic conditions, and current rider-to-driver demand. He pointed out that between 2018 and 2022, Uber’s prices increased by 83 percent.
Brown also referenced past allegations against Uber regarding its use of consumer data. In particular, he noted a claim made in 2016 by Keith Chen, then head of economic research at Uber, who stated that one predictor of customers’ willingness to pay higher fares was their device's battery level. This has led to suspicions that Uber may exploit customers' perceived desperation when their devices have low battery levels.
To address these concerns comprehensively, Brown requested detailed answers from Uber on several points by August 1, 2024:
- The methodology behind determining ride prices.
- The factors influencing price changes.
- How Uber assists consumers in planning for purchasing costs.
- The types of customer data used in setting prices.
- Whether strategies are applied to determine the highest price any given consumer will pay.
- Steps taken to ensure pricing algorithms do not discriminate based on protected classes such as gender or race.
- The impact of surge pricing activation on driver availability.
Brown's call for transparency seeks clarity on how these companies deploy pricing algorithms and use consumer data amid rising transportation costs.
###