18 ms·

Uber, Lyft drivers manipulate fares at DCA causing artificial price surges

252 points by edtechstrats 7y ago

im_new_here 7y ago
“You guys aren’t allowed to manipulate fares... we get to do that!”
_Microft 7y ago
As Charles Munger said "Show me the incentive and I will show you the outcome".
hn_throwaway_99 7y ago
That's one clever way to unionize...
gdhbcc 7y ago
I dont see how Lyft gets off calling this fraudulent. Seems to me it's the system working as intended, and as it should. Drivers dont want to drive for under a certain value, so they simply inform the app who adjusts the value to fulfill demand. Seems like its what you want to happen.
- mikeash 7y ago
  And it’s not like Uber and Lyft are a monopoly. Taxis are available, and there are roughly eighteen million private car services in the area.
- i_am_proteus 7y ago
  And it only works as long as all of the drivers in an area agree: one or two drivers who don't join the scheme, and it doesn't work.
  - metalliqaz 7y ago
    Not all. The large majority, but not all. There are very likely one or two drivers in the area that don't participate, simply because they aren't in the parking lot at the moment they orchestrate the mass logout. Surge pricing is about supply and demand, so if expected demand is high (like at an airport) they need a lot more than one or two drivers.
    - mikeash 7y ago
      I don’t think it even necessarily needs to be a large majority. It just needs to be enough such that the remaining drivers aren’t sufficient to meet demand. Depending on circumstances, that could require anywhere from one driver to all of them. It’s a great illustration of how supply and demand work to determine prices.
      - metalliqaz 7y ago
        Yeah, agreed, but these guys are going for maximum rate, so they have to get as many as possible.
        mikeash 7y ago
        Indeed. And as the rate grows higher, there’s ever more incentive to defect from the scheme. This should be a case study taught in Economics 101, it’s so pure and clear!
        kevin_b_er 7y ago
        Well, yes. It will settle at the rate they're actually willing to be paid, not the one their "employer" is setting for them.
    - duxup 7y ago
      Maybe not all, but I wouldn't be surpised to see someone "not participating" txting a buddy "prices up". Someone has to check it to make sure it is working.
      - netsharc 7y ago
        Couldn't they check using the passenger app?
        duxup 7y ago
        I the rate that the passenger sees always the rate that the driver is paid? If so then yeah, but I'm not sure they're always 1:1.
  - ardy42 7y ago
    > And it only works as long as all of the drivers in an area agree: one or two drivers who don't join the scheme, and it doesn't work. That's much easier to organize at an airport than elsewhere, since all the drivers are required to gather together in an airport waiting area.
  - asdff 7y ago
    If one or two drivers pick up the fair before the surge they are good for 15+ minutes of being not at the airport driving someone someplace, then the surge can just happen then after they leave.
- ardy42 7y ago
  > I dont see how Lyft gets off calling this fraudulent. The workers are "defrauding" Capital out of greater-than-substance wages. It's bullshit, and they'll try to re-frame in in terms of customers, but that's essentially their view.
  - richardknop 7y ago
    Well, Lyft drivers are supposed to be contractors, it's normal for contractors to set their rate so I don't see how this is fraudulent.
    - eropple 7y ago
      'ardy42 is presenting the part of the argument that Lyft and Uber can't say aloud but almost certainly believe. Lyft and Uber have a vested interest in making their objection seem "pro-consumer," when they're primarily anti-worker; lower prices to the consumer pumps up the demand curve and Lyft makes more money.
      - rayiner 7y ago
        > Lyft and Uber have a vested interest in making their objection seem "pro-consumer," when they're primarily anti-worker; Given that Lyft and Uber are losing money, there is no difference between the two. Uber and Lyft are just vehicles (hah) for consumers to make taxi drivers work for less than what taxi drivers used to make. People use Lyft and Uber because it’s cheaper than taxis. Since Uber and Lyft don’t make any money, those savings are coming out of the pockets of drivers.
        eropple 7y ago
        I mean, fair cop. Though a lot of my Uber and Lyft use is with the endless discounted ride offers I get, which seems to just be a transfer from investors to...well...me.
    - matz1 7y ago
      From the perspective of Lyft it is fraudulent.
- NotPaidToPost 7y ago
  This seems the very definition of fraud, though. Edit: Fraudulent: "intended to deceive someone in order to get money or property". The collusion is intended to deceive Lyft (and in the end customers) for financial gains.
  - eropple 7y ago
    By leveraging the supply controls, which are explicitly theirs to use to communicate willingness to take on work, in a two-sided market where you're not allowed to directly set prices? Please substantiate how that is fraudulent. If Lyft and Uber allowed direct pricing, this wouldn't happen. Drivers would set the price they're willing to work for. Instead, drivers--who, once more for emphasis, are supposed to use price fluctuations as incentive or disincentive for working, that's what "surge pricing" was in the first place--only have one message that they can send: "nope, not at that price". Or they can be obligated to work cheap because rich people demand their labor. Hrm. I think I now understand where the claim of "fraud" comes from.
    - chrismeller 7y ago
      So go drive a cab instead. I hear that’s a great life. They agreed to drive for a service for x. They can’t then complain that they are making x or manipulate the system to earn more than x.
      - eropple 7y ago
        No, they did not agree to "drive for a service for X". They entertain offers to drive at a given rate. They can choose to take those offers or not. That's the whole point of the on-demand, contractor-but-not-really relationship (see also the way that Lyft and Uber punish drivers to don't take absolutely every ride that pops up on the app) that underpins Lyft and Uber's business model. They're refusing to entertain offers below a certain rate. That drops supply, which requires price increases to satisfy demand on the other side. The market, literally, is working as intended.
        7y ago
- ma2rten 7y ago
  I don't know if I would call it fraud, but I can see where they are coming form. Drivers aren't individually deciding to turn off the app, but they are doing it collectively to manipulate the app into surge pricing.
- dnautics 7y ago
  Its not clear to me that Lyft is calling the behavior fraudulent. That's a sketchy AF quote-out-of-context by wjla.
Konnstann 7y ago
"On average, Lyft drivers earn over $20 per hour." I wonder if this figure takes into account all the waiting time, or just driving time on the app. If it is the latter, then that's a pretty scummy thing to say, considering that most drivers spend less than a third of the time actually driving people to their destination, putting the actual number closer to 7.00 an hour.
- lexs 7y ago
  Also does that include repairs, depreciation, insurance etc. of the car? What about fuel?
  - metalliqaz 7y ago
    It does not.
    - lr 7y ago
      Not to mention that, as a contractor, they have to pay SS and Medicare payroll taxes, which total an additional 7.65%. So, that $20/hour, given the overall expenses, is probably not even equivalent to the new NYC minimum wage of $15/hour.
      - fucking_tragedy 7y ago
        FICA tax rate for self-employed under $128k/yr is 15.3%. Effective tax rates for self-employed workers can reach close to 50%.
        mattkrause 7y ago
        50% total, or 50% marginal? There’s a world of difference between the two....
        papln 7y ago
        In a state/city with high income tax, you'll pay 13.5% social insurance tax, up to 10% state/local tax, and 10-25% Fed income tax, but you'll only hit the high end of those rates in total tax when you gross upwards of $300K/yr.
sixQuarks 7y ago
Uber/Lyft probably knew this was going on already, but since it increases revenue, probably was looking the other way. It’s going to be hard to ignore this now that it’s getting media attention.
giaour 7y ago
As much as I would be displeased if my fare were manipulated, I can only blame Uber and Lyft for this. They created an incentive for drivers to act as a unit, and groups of drivers are figuring it out. Really makes you long for the transparent, posted pricing of municipal taxis
- mikeash 7y ago
  The taxis are still available if you’d rather use them.
- klausjensen 7y ago
  >> Really makes you long for the transparent, posted pricing of municipal taxis ...Absolutely not. I live in Malta, where Uber does not exist, but similar services do + local regulated taxis. It is extremely clear who gets a rating and who does not give a f### about reputation and repeat business. The only ones who use the real taxis here are tourists. I don't know anybody local (expat or native), who would use the "real" taxi company.
  - la_barba 7y ago
    Taxi's are not allowed to price gouge, they also cannot refuse you service, etc, etc. I don't see that as a bad thing.
    - colejohnson66 7y ago
      Depends on the state. Also, the GP mentioned Malta, which isn’t the US.
      - la_barba 7y ago
        They mentioned Malta but they were responding to a comment that was made in a general context. There are benefits to having a regulated taxi system. Saying that unless those benefits are realized at every single place on earth, they don't mean much.
- 7y ago
deweller 7y ago
> They can’t afford to pickup people at Reagan for $4 in rush hour traffic. Are they really getting paid $4 to give someone a ride? That seems so low that drivers would be incentivized to find another job.
- mikeash 7y ago
  I think that’s the airport pickup fee that gets added on top of the standard time/mileage fare.
- Waterluvian 7y ago
  I'm not sure if the number is accurate but I do know how amazingly stubborn humans can be in finding a new job. I've had people refuse to quit a job that they groan about every day when I've offered them almost double the salary to work elsewhere with far better terms. Humans are risk averse and those who live paycheck to paycheck are especially so. It defies logic until you consider that their fear of the unknown + small chance they end up with no job has a massive adjustment weight applied to it in their minds.
  - mruts 7y ago
    Maybe that’s all true, but it doesn’t really make sense for Uber/Lyft. They could go back to their job driving whenever they wanted.
    - Waterluvian 7y ago
      You're applying a healthy dose of rationalism to this. I don't have the answer but I think there's a possibility that you can't expect rationalism when you're asking people to walk away from the major pattern in their life which puts food in their kids mouths.
  - iamtheworstdev 7y ago
    It has a massive cost if it doesn't work out too. We're talking about an income bracket that could miss, say, one credit card payment minimum then due to a raise in the minimum for missing, probably miss the next. Situations like this are posted on reddit.com/r/personalfinance all of the time. It's the same reason municipalities are dropping jail time for unpaid fines, etc, as hourly workers that miss one day of work unexpectedly are often fired and then end up in even more financial misfortune.
wlesieutre 7y ago
News flash: if you go out of your way to classify your entire workforce as contractors, you don't get to decide when they work or not. It turns out this has consequences on both sides. If Lyft wants to decide when their drivers are working, there's a process for this: 1) Hire employees 2) Give them a schedule 3) Pay them hourly plus mileage
- lexs 7y ago
  And suddenly Uber/Lyft are like any other Taxi company just with a massive valuation.
  - madeofpalk 7y ago
    Exactly.
  - metalliqaz 7y ago
    If their workforce suddenly switched from contractor to employee, I expect that valuation would evaporate.
  - wlesieutre 7y ago
    There's probably a balance to be struck, because part of the ridesharing design's efficiency is that if demand drops they can drop their rates paid to drivers, and the drivers who don't want to drive at those prices will stop. So if Lyft starts to say "we always want X drivers available as a base load, and we'll open up to contractors to fill in the demand spikes" it might make the contractor role too unreliable for anyone to bother doing it. At the very least, their costs would go up for both the employed drivers and the extra contractor drivers. Since their valuations comes mainly from a cheap labor pool, that presumably kills it. But in the current situation, if all their drivers at the airport sign off and say "I'm not driving at these prices," you get surge pricing to make it worth driving, that increases costs too. That's what happens when you're buying labor from independent contractors - if they don't want to sell it to you at a particular time for any reason, they don't have to. The real question here is "If Lyft recognizes when these organized sign-offs are happening, calls their bluff, and refuses to activate surge pricing, what happens?" Do the drivers really refuse to drive at the regular pricing and go home? Or do they all give in to a more tamper-resistant algorithm and keep driving at regular rates?
frgtpsswrdlame 7y ago
Seems to me that if they're contractors they should have the ability to set their own rates. What's unfortunate is that they have to trick the app.
- shereadsthenews 7y ago
  If Uber was a true platform with sellers able to ask for a price the wouldn't need this indirect means of influencing it.
  - papln 7y ago
    That's not true. The cabbies would still need a way to pressure each other to not accept lower fares.
Waterluvian 7y ago
I can think of a ton of technical ways Uber and Lyft can combat this. And they probably will. And they'll be short term happy and long term foolish. Because they're treating the symptoms, not the cause.
- lallysingh 7y ago
  They just have to keep treating symptoms until they can sell their equity + options.
- metalliqaz 7y ago
  Their hands may be a bit tied on addressing this issue, because if they start rejecting drivers based on when they choose to work, it's hard to call them contractors.
  - jfengel 7y ago
    Isn't that exactly what you get to do with contractors? One of your criteria in picking a contractor is showing up. Kind of a problem, I'm told, with housing contractors. And as with housing contractors, the best way to get them to show up is to offer more money than their other offers.
    - eropple 7y ago
      You can't make those stipulations on contractors whose entire relationship with the company is built on on-demand providing of on-demand rides. You can attempt to rewrite the contracts to change the allowed and encouraged behaviors, but the more restrictions added, the more it starts to smell like an employer-employee relationship--and that will kill Uber and Lyft stone dead.
    - woah 7y ago
      Yea, the definition of contractor that often gets thrown around in these discussions seems to exclude most real world contractors. I’ve worked as a construction contractor and a software contractor, and I did not get to set my hours in either one. It seems like the legal system is out of touch with the world of business. The real definition of a contractor may be “an employment relationship in which the worker does not want to assert employee rights”. In my case I did not want to be an employee because contractors got paid more for the same work, and I liked taking time off between gigs.
deleted 7y ago
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blakesterz 7y ago
I don't quite understand this: "The lot fills with 120 to 150 drivers sometimes for hours, waiting for the busy evening rush. " Are they saying drivers site and wait for hours to do this?
- metalliqaz 7y ago
  That's what happens at airports. The drivers are there anyway. While they wait, they coordinate to increase pricing just before an airplane drops off a bunch of passengers.
- lr 7y ago
  Some people actually do not want to be at home (I once had a taxi driver who drove us from Manhattan to Brooklyn, then waited for us to go home, hours later, all the while texting his family that he had to keep working). Also, leaving the car turned off and waiting in a lucrative parking lot saves gas, wear and tear on the car, and drastically decreases the opportunities to get into an accident. All in all, it is not a bad plan. Taxi drivers have done this for years (which is, ironically, probably one of reasons Uber got started in the first place -- in SF it was almost impossible to get a cab, because so many cabbies just wanted to get airport fares).
  - papln 7y ago
    The driver could be doing elance and mechanical turk work while waiting for your ride home!
htk 7y ago
I personally believe that driver's compensation is a valid discussion, but defrauding the system is not the way to do it. Uber/Lyft should just carefully identify and ban the cheaters and the lesson should spread as efficiently as the planning to cheat.
- mikeash 7y ago
  How is it fraud?
  - bena 7y ago
    I would imagine he sees it as fraud because these are drivers who are ready and willing to drive and are waiting on fares but are not indicated on the app as so. So when someone uses the app to find out about nearby rides, it shows no one, then it ups the rate to try and lure further drivers. Or the few drivers that are on the app currently. Then when the price is "right", all the waiting cars turn on the app at once to get the "surge" price. These people are exploiting the rules of the system to violate the spirit of the system. The more available cars, the lower the price. The more people find out that drivers are doing this, the more likely some form of retaliation will follow. Either users will just start using cabs again because the price is no different or they'll do something else. Like give default bad reviews to any airport trip that they suspect of manipulating surge pricing.
    - eropple 7y ago
      Drivers are not ready and willing to drive. They are ready and willing to drive for a higher rate. Lyft and Uber provide that higher rate when there is sufficient demand and insufficient supply. Working as designed, yo. Multi-billion-dollar companies do not need you to cape up for them. Somehow, somehow, they will survive against those mendacious poor people who have found a way to represent their requirements to the company.
      - bena 7y ago
        Where did I say this was a good or bad thing? Nowhere. I described things that could happen if the practice becomes too exploitative. Also, I can see the argument that it violates the TOS for the drivers. The drivers agree to drive for the price determined by the service. They are then using exploits to manipulate that price. If they don't want to drive for X fare, then they shouldn't be in their car. And this is an incredibly complicated situation because there are at least three different principles involved. The driver, the company, and the passenger. In some way, the passenger is being taken advantage of. The passenger _also_ has a contract with the company. And that part assumes that the price is determined fairly and not being manipulated by outside forces.
francisofascii 7y ago
Sounds like a cartel. Where parties mutually agree to cut supply to keep prices at a certain level.
- ianhawes 7y ago
  You forgot the kicker to the definition of a cartel: "restricting competition". The events in the article do not indicate that they are somehow prohibiting other drivers from accessing the platform. While it's certainly possible they're strong arming the drivers at the airport, overall they're not restricting someone from signing up to become a Lyft or Uber driver.
tzs 7y ago
I wonder if this is legal? With the drivers classified as independent contractors rather than employees would cooperation between drivers to manipulate prices run afoul of antitrust law?
- codedokode 7y ago
  Is not a ridesharing company the one who sets and manipulates the prices?
exabrial 7y ago
This is hilarious. Props to the drivers. Capitalism at it's finest: assumption of information imbalance. If uber and lyft do nothing, this behavior will autocorrect itself: expect a few drivers to rebel/revolt after the news of the behavior spreads. Keeping the secret will get harder and harder.
- zentiggr 7y ago
  But it doesn't have to be secret, ad defectors only hurt themselves by accepting lower pay for the same fare. That seems like a strong incentive to play along.
  - exabrial 7y ago
    Exactly, but at some price point, for a certain individual, the acceptance of the lower fair is a better deal to bc of a guaranteed outcome.
Causality1 7y ago
Seems like a small software tweak is all it would take to obliterate this tactic, like updating surge pricing every time a driver logged in.
- lr 7y ago
  The whole point of surge pricing is to get more drivers on the street. If they decrease it that quickly, then there is zero incentive for a driver to leave their house and get in their car and get out on the street, because by the time they do that, the prices are back down.
  - sly010 7y ago
    In fact I am surprised it reacts as fast as the article describes.
    - jakelazaroff 7y ago
      I assume it's a combination of that and the sudden demand of a plane full of people all opening up their apps to look for a ride simultaneously.
  - papln 7y ago
    Uber can predict that the drivers are at the airport -- they were logged in when they dropped off a fare, possibly when they were already in line at the cab stand, and also Uber can use a bit of common sense.
  - asdff 7y ago
    I'm fine with it. Airports are the worst sort of fares a driver could take, people could get dropped off deep in the suburbs and the driver has to take 20 mins to get back to the city where people are actually calling rides. Occasionally these distant drivers will try to snipe me too while they are out there, probably hoping I'm too drunk to notice that they will take 20 mins to arrive. It's fickle work.
deleted 7y ago
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cypherpunks01 7y ago
This is really curious, in that it appears to be a normal strike for higher wages, except it's being coordinated on an hourly basis for just a few minutes until the company agrees to pay more! Contractors can decide when and how they want to work, and therefore determine the price at which to sell their labor at, so to me it seems they are simply exercising their rights here. Like others have mentioned, if most drivers don't choose to participate, then this "scheme" wouldn't function.
- rosege 7y ago
  Not 100% sure I'd call it a strike but its just the free market working quickly. I have a feeling though this will spread around the world and be adapted by drivers in many other countries. I've traveled a bit in South America and Uber drivers there really do earn barely anything - I dont know how they afford the gas - e.g. 1/2 hour trip for $3-$4.
  - laken 7y ago
    I've also traveled in South America and relied on Uber heavily. I talked with a few drivers, and they all found Uber to actually be worth it. For example, Colombia's minimum wage when converted to 40hrs/wk/month comes out to ~$1.50/hr. It's not a bad gig there, and the cost of living is relatively low. The bigger problem is the danger of driving for Uber, as taxistas are not a fan of Uber drivers.
peterwwillis 7y ago
The only economic model that make Uber and Lyft make sense is if drivers are willing to take low pay (considering all their other costs). If they make more money than cab drivers, the whole model falls apart, because then cabs will be cheaper and the service won't be competitive. (Granted, the lack of having to pay for medallions saves them a bunch of money) I think the only long-term business plan that makes sense for them is black cars, or people who don't want the hassle of Taxis.
- sundaeofshock 7y ago
  Keep in mind that uber was successful early on not because of price, but because it was significantly more reliable then a cab. I was willing to pay a bit more then a cab to get to the airport because I knew I could count on that uber to arrive at my house on time. Uber and Lyft are not trying to be cost competitive with cabs; they are trying to be cost competitive with public transit.
  - taormina 7y ago
    I'm still convinced that the only innovation that ever happened in this space by Uber was the guaranteed ride. They chose to fight (ok, ignore) the taxi regulations, but from a features perspective the taxi apps already did all this. The difference was that any random person off the street could still flag your cab so in practice you rarely got a taxi if you weren't in a "hot spot". Reliability matters.
jermaustin1 7y ago
I'm not a lawyer, nor do I agree with what I'm about to say, but the drivers need to be careful, because they might run afoul of collusion. Since they are all independent contractors, they are "rivals" in the same industry, so with all of them cooperating to increase fares for their benefit (and based on my understanding of the law), they are technically colluding.
- ceejayoz 7y ago
  They should just form a union. Contractors can form one - they don't get all the privileges (for example, the employer isn't legally required to bargain with them, and can retaliate against strikes) but it'd probably permit this sort of short-term work stoppage.
  - jermaustin1 7y ago
    Depends on the state, but federally, independent contractors are excluded from the right to form or participate in unions as defined by the National Labor Relations Act. EDIT: independent contractors are excluded from the protections of their union actions.
    - ceejayoz 7y ago
      https://cwa-union.org/about/rights-on-job/legal-toolkit/my-employer-says-i-am-independent-contractor-what-does-mean https://cwa-union.org/about/rights-on-job/legal-toolkit/my-e... > As an independent contractor, the terms and conditions of the work you perform are set out in a contract between you and the employer. Even though you are not considered an “employee” under federal labor law, you may still join a union. However, you should keep in mind that a unit of independent contractors is not subject to the same privileges and protections as a regular union bargaining unit. For example, an employer is not under the same obligation to bargain with a union regarding contract terms for an independent contractor that it is to bargain over issues affecting its regular employees. Also, an independent contractor who went on strike would not be protected from employer reprisals under the National Labor Relations Act. Plenty of contract plumbers, electricians, etc. are members of unions.
radcon 7y ago
This seems like it could also torpedo their Contractor vs. Employee argument. Contractors get to set rates, employees don't. So you can't say they're contractors AND accuse them of committing fraud when they try to set their own rates. Now if only someone would develop an app that does this for entire cities. The app could be their version of a union.
- leereeves 7y ago
  Under the theory that Uber/Lyft employees are contractors and allowed to set prices, wouldn't coordinating ("conspiring") to do so en masse be considered price fixing? Personally I think they should be considered employees, but a pro-management federal prosecutor could make some trouble for them.
  - dpflan 7y ago
    This is an interesting dynamic - the colluding drivers wait for Lyft/Uber to determine the surge pricing and the point-person for the drivers informs of the price increase to a target that is acceptable. Now how does the pricing affect the demand for the rides? Will a Lyft user switch to Uber if the collusion is affecting only 1 application (vice versa too)?
  - calimac 7y ago
    would they have to have more control over the liquidity of the market to be price fixing?
  - codedokode 7y ago
    I don't think they are allowed to set prices. Furthermore, they are probably somehow punished if they don't accept the orders that app offers.
    - gsnedders 7y ago
      They aren't, and the furthermore is also true beyond a certain percentage. This is part of the reason why in a number of jurisdictions the courts have ruled that the drivers aren't independent contractors.
kdot 7y ago
What's the rational for percentage based fees? The technology cost for a 4 mile ride is the same for a 50 mile ride.
- eropple 7y ago
  "Because they can." That's really all they (and, to be honest, most "marketplace" tech companies) need to say. They have the customers; here are our terms. It kinda really sucks, because the quality incentive goes out the window.
- Donald 7y ago
  An imbalance of power between a a $70 billion dollar company like Uber and folks who need an extra $200/week to make rent. Also keep in mind that even at these fee levels, Uber and Lyft are somehow not profitable.
- icebraining 7y ago
  > The technology cost for a 4 mile ride is the same for a 50 mile ride. Technically no, the real-time tracking requires constant data streaming to and from their servers, proportional to the duration of the ride. But a more likely answer is that a fixed amount per ride makes short rides prohibitive or at least less appealing. And if you think about it, much of the costs are probably fixed (across all rides), so you could say they should charge $millions to the first ride, then just charge marginal costs for the others. Dilution of costs across purchases is an indispensable part of doing business.
- Jommi 7y ago
  It's not just percentage based. There is a fixed booking fee sometimes as well.
  - asdff 7y ago
    Some cities seem to get far better rates too. In Boston most of my trips were around $4-5, maybe closer to $15 to get to logan. When I was in Columbus it was like the trips were arbitrarily twice as much, hovering $7-10 for similar distances. Miami probably had the highest rates I've experienced (Like $25+ to get to the other side of the biscayne bay), traffic was terrible as well so I wasn't as shocked, but it seemed much higher than going a similar distance in LA. I was still able to get rides in 10 minutes in most cases everywhere, so it wasn't for lack of free drivers, it seemed.
calvinbhai 7y ago
This is an age old hack. I'm not sure why this is being reported as new. They did this since the early days of Surge Pricing.
duxup 7y ago
This seems like a logical outcome considering the company and contractors have an increasingly disconnected and at times adversarial relationship. The entire gig economy is based on shifting risk onto the contractor (demand changes, benefits, protections regarding injury / illness)... and to some extent onto the consumer too.
ackbar03 7y ago
Oh man these guys think this is fraudulent? They should come to China. When rebates were all the rage, where the ride hailing companies would pay drivers subsidies, they developed software that could fake the GPS address on the phone and pick up fake rides without actually driving and get massive rebates
CPLX 7y ago
When low paid workers coordinate their efforts to increase their pay it's called an "artificial price surge" and allegations of fraud are thrown around. When highly paid executives, investors, and board members coordinate their efforts to increase their pay what does the media call it?
- iscrewyou 7y ago
  innovation
- 6gvONxR4sf7o 7y ago
  Price fixing, predatory pricing, bid rigging, collusion.
- zentiggr 7y ago
  VC driven exit strategy
- kevinmgranger 7y ago
  Indeed. I never understood how coordinated bargaining is "artificial" but the decisions about how much profit goes towards the workers versus executives is somehow... "natural"?
- hawaiian 7y ago
  Growth
- klyrs 7y ago
  Neat trick that shareholders hate!
rrival 7y ago
Experienced this at LAX - another driver called my driver, commenting "It's at 3.5!!" - well played, I don't fault them for this at all.
codedokode 7y ago
I don't like the word "manipulating". It is like a trade union negotiating better terms. If they do it voluntarily without intimidating the drivers then I don't see any problem. They should not feel guilty. Also, in a Lyft's statement: > Over 75% drive less than 10 hours a week to supplement existing jobs. I wonder, are those 75% working part-time or full-time? It must be tiring driving 2 more hours after 9-hour working day.
llamataboot 7y ago
Few things interesting here - One is that the workers are getting paid more per the algorithm that these companies designed to charge customers - that is, they are getting the company to facilitate higher payments but the company itself isn't being charged more! So in that case, the drivers are simply arguing that uber/lyft are artificially undervaluing their time because clearly these passengers are willing to pay 15% more to them to get home... -- It is telling to me how often Lyft/Uber/et all emphasize that their philosophy is that these gig economy jobs are just something you do a tiny bit extra to get some extra cash in your pocket. That is they are designed to be a small supplement to the job that provides you with most of your income, so hey, we don't really have to worry about working conditions, etc. But I'm not sure I believe their stats. Over the past few years it is nearly 100% of the drivers I get that are doing it full-time, and many/most of the "teacher moonlighting for extra vacation money" type drivers have given way to lots of former actual taxi drivers who quit their taxi company and now work both uber/lyft.
- nabergh 7y ago
  I wouldn't be so convinced that passengers are willing to pay these surge prices to go home. Sure, the first time a passenger encounters this artificial surge, they're already planning on taking uber/lyft home so they'll pay it because they probably don't have another option immediately available. But the next time a passenger arrives at DCA (could be a month or two), they might remember uber/lyft is expensive when they land so they would have arranged a different option to leave the airport. Consumer reaction to prices changes may not always be immediate. These drivers are operating in their own interest in the short term but who knows if they are in the long term.
  - cpitman 7y ago
    100%. I fly out of DCA/IAD, and each time weigh the options of parking at the airport and taking a rideshare service. Last time I used Uber from DCA it was much more expensive than I expected, and have been parking there since.
  - llamataboot 7y ago
    Well, there's always the immediate option of a regular taxi! But yes, sure, who knows, but isn't that the point the free market fundamentalists often make about price clearing? Supply and demand will somewhere theoretically clear each other and maybe it's always a dance around that spot, but in this case the drivers are using the algorithm to try to find the best price they can get for their service, rather than let Uber/Lyft determine it artificially. I just don't understand why when capital sets the "price" of labor, it is considered free market ("No one forces anyone to drive for Lyft") even though many people literally have a choice between working or starving, which isn't much of a "free choice". But when labor tries mechanisms to find a new price, it's "collusion" and "gaming the system" -- After all, even in this, there is always room for "defectors" to take the passengers that wouldn't use the higher rate!
zone411 7y ago
All this discussion about employee/contractor situation or possible collusion won't matter after Uber/Lyft close this loophole and this can be done easily. It makes no sense that the drivers would allow the reporter to publicize this trick.
dmbaggett 7y ago
I've definitely experienced this at DCA, and it's worth nothing as well that it sometimes take hours to get out of the airport due to the insane traffic jams right around the terminals and in the parking garages. DCA has gone from my favorite airport to literally my least favorite over the last year or so. I've been using Dulles instead even though it's way less convenient.
- Terretta 7y ago
  I’m trying to figure out how to define “way less convenient” in a way that has you choosing to use it instead. :-)
  - dmbaggett 7y ago
    It's many miles farther -- but I then don't get stuck at the airport for two hours Friday night. Also, DCA is great when you're inside while IAD is the usual huge-airport security nightmare.
- momokoko 7y ago
  DCA is also one of the easiest airports in the US to access the metro(public transit) out of the terminal. Is there a reason you just don't hop on the yellow line and get off at a less congested stop closer to your final destination?
  - cpitman 7y ago
    Metro's hours are usually the problem for me, usually getting to the airport after the last train has left.
    - momokoko 7y ago
      Absolutely, but in that case, the issue about extreme traffic congestion is much less likely. Even though traffic in the area can be difficult at times, 1AM seems like an unlikely time to run into that.
mimixco 7y ago
Both companies claim that drivers are independent contractors who can drive when and where they want, so how can they say that these drivers are in violation of anything?
awake 7y ago
I’ve heard about this tactic from people working at Uber years ago. I think they’re aware that it happens. The way it was described to me is the Ubers are in a line at the airport and each car signs off except the very first. That way rides keep coming and the first person in line gets surge pricing
- papln 7y ago
  This seems easy to fix on Uber/Lyft's side --- to recognize that they don't need to maintain book depth. At the airport, since passengers are effectively queued up.
Shivetya 7y ago
I have no issue with them not being available and having rates go up. that is what they system should do. I know uber/lyft drivers that turn off the app after drops off in areas they like being so that they don't get prompted to take a nearby fare. I do find it annoying that these drivers are upset at the fees. Look, before then all you could do is work for a taxi service and they make uber and lyft look like saints for the most part. you are free to work for whomever you want and you got into the deal knowing what it was.
- jakelazaroff 7y ago
  > You are free to ride with whomever you want, and you got into the deal knowing what it was. This cuts both ways, though. Taxis still exist! If you don't want to take Uber or Lyft, you are free to take a normal taxi, use public transportation, arrange your own ride, etc.
  - diminoten 7y ago
    Or use one of the dozens of local competitors that are popping up.
rmrfrmrf 7y ago
Unionization and striking for the gig economy. You love to see it!
bradleybuda 7y ago
I’ve always been fascinated by the way Uber has implemented their market dynamics using surge pricing. Uber isn’t a market for rides in the way that, say, a stock exchange is a market for stocks. There aren’t drivers setting their asking price and riders making bids, nor is there an order book where matches are made at a clearing price, and understandably so - I can’t imagine how to build a comprehensible UX around a “true” bid-ask marketplace. Instead, Uber presumably has historic estimates of the supply and demand curves at different locations, different times of the week, different passenger / rider populations (business travelers or tourists?) and then uses the measured “true” supply and demand to find a clearing price, and therefore decide whether or not a market is going to surge. The UX of surge is important too - the raison d’être of surge pricing is to bring more drivers to an undersupplied market. That means that when you detect a supply or demand shock that would lead to surge pricing, you want to increase the surge as quickly as possible to send out the “we need more drivers” signal, because there’s a latency in getting more supply (drivers have to relocate). Conversely, Uber doesn’t want to drop the surge price too quickly - they want downward movement to be sticky - because you don’t want to tell drivers “there’s more money to be made over here” just to renege on that promise before the supply can even get there. So if surge is sticky on the way down, these drivers may have found a way to exploit the pricing algorithm - simulate a price shock then reap the rewards. If surge were not sticky on the way down, this strategy might be much less effective - a few drivers would get better fares, but the market would return to equilibrium faster. None of this is to say that you can’t have cartel behavior in a “bid-ask”-style market too, but I suspect this is a “hack” of Uber’s pricing UX as much as anything else.
ikeboy 7y ago
They can just counteract this by refusing to turn on surge pricing if they detect a large number of drivers disappearing if they predict that they'll come back shortly. Should be easy to predict that pattern and counteract it, unless the drivers are willing to skip work for an extended period of time.
- freeflight 7y ago
  But why should they? Both Uber and Lyft also profit from this because in the end it's the customers who pay the difference. So I don't really see either of these companies wasting time and effort on fixing this "problem".
deleted 7y ago
[deleted]
sharadov 7y ago
Human dis-ingenuity has to be admired, beautiful!
traeregan 7y ago
https://callaride.com https://callaride.com is launching next month (local to the Tampa Bay, FL area only for now), and one of their key differentiators is giving drivers the ability to set their rate. There will be minimums and maximums in-place, but they will have more control than with Uber or Lyft. Note: I am a third-party PM working with the web and mobile application teams.
40acres 7y ago
Don't Uber and Lyft lose on every ride? I wonder if the increased fair caused by this cooperation makes the average ride profitable. Perhaps the price of a ride is more elastic than Uber and Lyft think? Especially at airports.
diydsp 7y ago
Why does everyone assume the workers are screwing Uber/Lyft? Uber/Lyft make more money this way. The passengers are getting screwed.
chrischen 7y ago
I think many people are missing some facts from the article. They aren’t so much going on “strike” as they are just turning off their apps on masse 5 minutes before plane lands to trigger surge pricing, and then turning back on to catch the passengers at surge pricing. Obviously customers are still choosing to accept such fares, but may not know that the real price (if they wait a bit) would be much lower.
smadge 7y ago
“Over 75% drive less than 10 hours a week to supplement existing jobs. On average, Lyft drivers earn over $20 per hour.” These statistics could be very misleading. For example let’s say one driver works 4 hours, another 6 hours, another 10 hours with all three making making $25/hr and the final one works 80 hours making $10/hour. In this scenario 75% of drivers are driving 10 or less hours a week and the mean driver hourly rate is over $20. However 80% of the hours driven are by one driver making $10/hour. This one driver is clearly the workhorse of the ride-sharing company making the bulk of the profit.
sfifs 7y ago
I've seen something like this predictably happen with Grab in my office area in Singapore. At 5 you suddenly can't get cabs. You can at 4:55.
asdffdsa 7y ago
Ahh, the qualities of competitive markets. If theres antitrust laws, there should be similar policies from the workers' side as well.
- colejohnson66 7y ago
  So we should go after strikers because they’re depriving their employer of money?

252 points by edtechstrats 7y ago

im_new_here 7y ago

“You guys aren’t allowed to manipulate fares... we get to do that!”

_Microft 7y ago

As Charles Munger said "Show me the incentive and I will show you the outcome".

hn_throwaway_99 7y ago

That's one clever way to unionize...

gdhbcc 7y ago

I dont see how Lyft gets off calling this fraudulent. Seems to me it's the system working as intended, and as it should. Drivers dont want to drive for under a certain value, so they simply inform the app who adjusts the value to fulfill demand. Seems like its what you want to happen.

mikeash 7y ago
And it’s not like Uber and Lyft are a monopoly. Taxis are available, and there are roughly eighteen million private car services in the area.
i_am_proteus 7y ago
And it only works as long as all of the drivers in an area agree: one or two drivers who don't join the scheme, and it doesn't work.
- metalliqaz 7y ago
  Not all. The large majority, but not all. There are very likely one or two drivers in the area that don't participate, simply because they aren't in the parking lot at the moment they orchestrate the mass logout. Surge pricing is about supply and demand, so if expected demand is high (like at an airport) they need a lot more than one or two drivers.
  - mikeash 7y ago
    I don’t think it even necessarily needs to be a large majority. It just needs to be enough such that the remaining drivers aren’t sufficient to meet demand. Depending on circumstances, that could require anywhere from one driver to all of them. It’s a great illustration of how supply and demand work to determine prices.
    - metalliqaz 7y ago
      Yeah, agreed, but these guys are going for maximum rate, so they have to get as many as possible.
      - mikeash 7y ago
        Indeed. And as the rate grows higher, there’s ever more incentive to defect from the scheme. This should be a case study taught in Economics 101, it’s so pure and clear!
        kevin_b_er 7y ago
        Well, yes. It will settle at the rate they're actually willing to be paid, not the one their "employer" is setting for them.
  - duxup 7y ago
    Maybe not all, but I wouldn't be surpised to see someone "not participating" txting a buddy "prices up". Someone has to check it to make sure it is working.
    - netsharc 7y ago
      Couldn't they check using the passenger app?
      - duxup 7y ago
        I the rate that the passenger sees always the rate that the driver is paid? If so then yeah, but I'm not sure they're always 1:1.
- ardy42 7y ago
  > And it only works as long as all of the drivers in an area agree: one or two drivers who don't join the scheme, and it doesn't work. That's much easier to organize at an airport than elsewhere, since all the drivers are required to gather together in an airport waiting area.
- asdff 7y ago
  If one or two drivers pick up the fair before the surge they are good for 15+ minutes of being not at the airport driving someone someplace, then the surge can just happen then after they leave.
ardy42 7y ago
> I dont see how Lyft gets off calling this fraudulent. The workers are "defrauding" Capital out of greater-than-substance wages. It's bullshit, and they'll try to re-frame in in terms of customers, but that's essentially their view.
- richardknop 7y ago
  Well, Lyft drivers are supposed to be contractors, it's normal for contractors to set their rate so I don't see how this is fraudulent.
  - eropple 7y ago
    'ardy42 is presenting the part of the argument that Lyft and Uber can't say aloud but almost certainly believe. Lyft and Uber have a vested interest in making their objection seem "pro-consumer," when they're primarily anti-worker; lower prices to the consumer pumps up the demand curve and Lyft makes more money.
    - rayiner 7y ago
      > Lyft and Uber have a vested interest in making their objection seem "pro-consumer," when they're primarily anti-worker; Given that Lyft and Uber are losing money, there is no difference between the two. Uber and Lyft are just vehicles (hah) for consumers to make taxi drivers work for less than what taxi drivers used to make. People use Lyft and Uber because it’s cheaper than taxis. Since Uber and Lyft don’t make any money, those savings are coming out of the pockets of drivers.
      - eropple 7y ago
        I mean, fair cop. Though a lot of my Uber and Lyft use is with the endless discounted ride offers I get, which seems to just be a transfer from investors to...well...me.
  - matz1 7y ago
    From the perspective of Lyft it is fraudulent.
NotPaidToPost 7y ago
This seems the very definition of fraud, though. Edit: Fraudulent: "intended to deceive someone in order to get money or property". The collusion is intended to deceive Lyft (and in the end customers) for financial gains.
- eropple 7y ago
  By leveraging the supply controls, which are explicitly theirs to use to communicate willingness to take on work, in a two-sided market where you're not allowed to directly set prices? Please substantiate how that is fraudulent. If Lyft and Uber allowed direct pricing, this wouldn't happen. Drivers would set the price they're willing to work for. Instead, drivers--who, once more for emphasis, are supposed to use price fluctuations as incentive or disincentive for working, that's what "surge pricing" was in the first place--only have one message that they can send: "nope, not at that price". Or they can be obligated to work cheap because rich people demand their labor. Hrm. I think I now understand where the claim of "fraud" comes from.
  - chrismeller 7y ago
    So go drive a cab instead. I hear that’s a great life. They agreed to drive for a service for x. They can’t then complain that they are making x or manipulate the system to earn more than x.
    - eropple 7y ago
      No, they did not agree to "drive for a service for X". They entertain offers to drive at a given rate. They can choose to take those offers or not. That's the whole point of the on-demand, contractor-but-not-really relationship (see also the way that Lyft and Uber punish drivers to don't take absolutely every ride that pops up on the app) that underpins Lyft and Uber's business model. They're refusing to entertain offers below a certain rate. That drops supply, which requires price increases to satisfy demand on the other side. The market, literally, is working as intended.
      - 7y ago
ma2rten 7y ago
I don't know if I would call it fraud, but I can see where they are coming form. Drivers aren't individually deciding to turn off the app, but they are doing it collectively to manipulate the app into surge pricing.
dnautics 7y ago
Its not clear to me that Lyft is calling the behavior fraudulent. That's a sketchy AF quote-out-of-context by wjla.

Konnstann 7y ago

"On average, Lyft drivers earn over $20 per hour." I wonder if this figure takes into account all the waiting time, or just driving time on the app. If it is the latter, then that's a pretty scummy thing to say, considering that most drivers spend less than a third of the time actually driving people to their destination, putting the actual number closer to 7.00 an hour.

lexs 7y ago
Also does that include repairs, depreciation, insurance etc. of the car? What about fuel?
- metalliqaz 7y ago
  It does not.
  - lr 7y ago
    Not to mention that, as a contractor, they have to pay SS and Medicare payroll taxes, which total an additional 7.65%. So, that $20/hour, given the overall expenses, is probably not even equivalent to the new NYC minimum wage of $15/hour.
    - fucking_tragedy 7y ago
      FICA tax rate for self-employed under $128k/yr is 15.3%. Effective tax rates for self-employed workers can reach close to 50%.
      - mattkrause 7y ago
        50% total, or 50% marginal? There’s a world of difference between the two....
        papln 7y ago
        In a state/city with high income tax, you'll pay 13.5% social insurance tax, up to 10% state/local tax, and 10-25% Fed income tax, but you'll only hit the high end of those rates in total tax when you gross upwards of $300K/yr.

sixQuarks 7y ago

Uber/Lyft probably knew this was going on already, but since it increases revenue, probably was looking the other way. It’s going to be hard to ignore this now that it’s getting media attention.

giaour 7y ago

As much as I would be displeased if my fare were manipulated, I can only blame Uber and Lyft for this. They created an incentive for drivers to act as a unit, and groups of drivers are figuring it out. Really makes you long for the transparent, posted pricing of municipal taxis

mikeash 7y ago
The taxis are still available if you’d rather use them.
klausjensen 7y ago
>> Really makes you long for the transparent, posted pricing of municipal taxis ...Absolutely not. I live in Malta, where Uber does not exist, but similar services do + local regulated taxis. It is extremely clear who gets a rating and who does not give a f### about reputation and repeat business. The only ones who use the real taxis here are tourists. I don't know anybody local (expat or native), who would use the "real" taxi company.
- la_barba 7y ago
  Taxi's are not allowed to price gouge, they also cannot refuse you service, etc, etc. I don't see that as a bad thing.
  - colejohnson66 7y ago
    Depends on the state. Also, the GP mentioned Malta, which isn’t the US.
    - la_barba 7y ago
      They mentioned Malta but they were responding to a comment that was made in a general context. There are benefits to having a regulated taxi system. Saying that unless those benefits are realized at every single place on earth, they don't mean much.
7y ago

deweller 7y ago

> They can’t afford to pickup people at Reagan for $4 in rush hour traffic. Are they really getting paid $4 to give someone a ride? That seems so low that drivers would be incentivized to find another job.

mikeash 7y ago
I think that’s the airport pickup fee that gets added on top of the standard time/mileage fare.
Waterluvian 7y ago
I'm not sure if the number is accurate but I do know how amazingly stubborn humans can be in finding a new job. I've had people refuse to quit a job that they groan about every day when I've offered them almost double the salary to work elsewhere with far better terms. Humans are risk averse and those who live paycheck to paycheck are especially so. It defies logic until you consider that their fear of the unknown + small chance they end up with no job has a massive adjustment weight applied to it in their minds.
- mruts 7y ago
  Maybe that’s all true, but it doesn’t really make sense for Uber/Lyft. They could go back to their job driving whenever they wanted.
  - Waterluvian 7y ago
    You're applying a healthy dose of rationalism to this. I don't have the answer but I think there's a possibility that you can't expect rationalism when you're asking people to walk away from the major pattern in their life which puts food in their kids mouths.
- iamtheworstdev 7y ago
  It has a massive cost if it doesn't work out too. We're talking about an income bracket that could miss, say, one credit card payment minimum then due to a raise in the minimum for missing, probably miss the next. Situations like this are posted on reddit.com/r/personalfinance all of the time. It's the same reason municipalities are dropping jail time for unpaid fines, etc, as hourly workers that miss one day of work unexpectedly are often fired and then end up in even more financial misfortune.

wlesieutre 7y ago

News flash: if you go out of your way to classify your entire workforce as contractors, you don't get to decide when they work or not. It turns out this has consequences on both sides. If Lyft wants to decide when their drivers are working, there's a process for this: 1) Hire employees 2) Give them a schedule 3) Pay them hourly plus mileage

lexs 7y ago
And suddenly Uber/Lyft are like any other Taxi company just with a massive valuation.
- madeofpalk 7y ago
  Exactly.
- metalliqaz 7y ago
  If their workforce suddenly switched from contractor to employee, I expect that valuation would evaporate.
- wlesieutre 7y ago
  There's probably a balance to be struck, because part of the ridesharing design's efficiency is that if demand drops they can drop their rates paid to drivers, and the drivers who don't want to drive at those prices will stop. So if Lyft starts to say "we always want X drivers available as a base load, and we'll open up to contractors to fill in the demand spikes" it might make the contractor role too unreliable for anyone to bother doing it. At the very least, their costs would go up for both the employed drivers and the extra contractor drivers. Since their valuations comes mainly from a cheap labor pool, that presumably kills it. But in the current situation, if all their drivers at the airport sign off and say "I'm not driving at these prices," you get surge pricing to make it worth driving, that increases costs too. That's what happens when you're buying labor from independent contractors - if they don't want to sell it to you at a particular time for any reason, they don't have to. The real question here is "If Lyft recognizes when these organized sign-offs are happening, calls their bluff, and refuses to activate surge pricing, what happens?" Do the drivers really refuse to drive at the regular pricing and go home? Or do they all give in to a more tamper-resistant algorithm and keep driving at regular rates?

frgtpsswrdlame 7y ago

Seems to me that if they're contractors they should have the ability to set their own rates. What's unfortunate is that they have to trick the app.

shereadsthenews 7y ago
If Uber was a true platform with sellers able to ask for a price the wouldn't need this indirect means of influencing it.
- papln 7y ago
  That's not true. The cabbies would still need a way to pressure each other to not accept lower fares.

Waterluvian 7y ago

I can think of a ton of technical ways Uber and Lyft can combat this. And they probably will. And they'll be short term happy and long term foolish. Because they're treating the symptoms, not the cause.

lallysingh 7y ago
They just have to keep treating symptoms until they can sell their equity + options.
metalliqaz 7y ago
Their hands may be a bit tied on addressing this issue, because if they start rejecting drivers based on when they choose to work, it's hard to call them contractors.
- jfengel 7y ago
  Isn't that exactly what you get to do with contractors? One of your criteria in picking a contractor is showing up. Kind of a problem, I'm told, with housing contractors. And as with housing contractors, the best way to get them to show up is to offer more money than their other offers.
  - eropple 7y ago
    You can't make those stipulations on contractors whose entire relationship with the company is built on on-demand providing of on-demand rides. You can attempt to rewrite the contracts to change the allowed and encouraged behaviors, but the more restrictions added, the more it starts to smell like an employer-employee relationship--and that will kill Uber and Lyft stone dead.
  - woah 7y ago
    Yea, the definition of contractor that often gets thrown around in these discussions seems to exclude most real world contractors. I’ve worked as a construction contractor and a software contractor, and I did not get to set my hours in either one. It seems like the legal system is out of touch with the world of business. The real definition of a contractor may be “an employment relationship in which the worker does not want to assert employee rights”. In my case I did not want to be an employee because contractors got paid more for the same work, and I liked taking time off between gigs.

deleted 7y ago

[deleted]

blakesterz 7y ago

I don't quite understand this: "The lot fills with 120 to 150 drivers sometimes for hours, waiting for the busy evening rush. " Are they saying drivers site and wait for hours to do this?

metalliqaz 7y ago
That's what happens at airports. The drivers are there anyway. While they wait, they coordinate to increase pricing just before an airplane drops off a bunch of passengers.
lr 7y ago
Some people actually do not want to be at home (I once had a taxi driver who drove us from Manhattan to Brooklyn, then waited for us to go home, hours later, all the while texting his family that he had to keep working). Also, leaving the car turned off and waiting in a lucrative parking lot saves gas, wear and tear on the car, and drastically decreases the opportunities to get into an accident. All in all, it is not a bad plan. Taxi drivers have done this for years (which is, ironically, probably one of reasons Uber got started in the first place -- in SF it was almost impossible to get a cab, because so many cabbies just wanted to get airport fares).
- papln 7y ago
  The driver could be doing elance and mechanical turk work while waiting for your ride home!

htk 7y ago

I personally believe that driver's compensation is a valid discussion, but defrauding the system is not the way to do it. Uber/Lyft should just carefully identify and ban the cheaters and the lesson should spread as efficiently as the planning to cheat.

mikeash 7y ago
How is it fraud?
- bena 7y ago
  I would imagine he sees it as fraud because these are drivers who are ready and willing to drive and are waiting on fares but are not indicated on the app as so. So when someone uses the app to find out about nearby rides, it shows no one, then it ups the rate to try and lure further drivers. Or the few drivers that are on the app currently. Then when the price is "right", all the waiting cars turn on the app at once to get the "surge" price. These people are exploiting the rules of the system to violate the spirit of the system. The more available cars, the lower the price. The more people find out that drivers are doing this, the more likely some form of retaliation will follow. Either users will just start using cabs again because the price is no different or they'll do something else. Like give default bad reviews to any airport trip that they suspect of manipulating surge pricing.
  - eropple 7y ago
    Drivers are not ready and willing to drive. They are ready and willing to drive for a higher rate. Lyft and Uber provide that higher rate when there is sufficient demand and insufficient supply. Working as designed, yo. Multi-billion-dollar companies do not need you to cape up for them. Somehow, somehow, they will survive against those mendacious poor people who have found a way to represent their requirements to the company.
    - bena 7y ago
      Where did I say this was a good or bad thing? Nowhere. I described things that could happen if the practice becomes too exploitative. Also, I can see the argument that it violates the TOS for the drivers. The drivers agree to drive for the price determined by the service. They are then using exploits to manipulate that price. If they don't want to drive for X fare, then they shouldn't be in their car. And this is an incredibly complicated situation because there are at least three different principles involved. The driver, the company, and the passenger. In some way, the passenger is being taken advantage of. The passenger _also_ has a contract with the company. And that part assumes that the price is determined fairly and not being manipulated by outside forces.

francisofascii 7y ago

Sounds like a cartel. Where parties mutually agree to cut supply to keep prices at a certain level.

ianhawes 7y ago
You forgot the kicker to the definition of a cartel: "restricting competition". The events in the article do not indicate that they are somehow prohibiting other drivers from accessing the platform. While it's certainly possible they're strong arming the drivers at the airport, overall they're not restricting someone from signing up to become a Lyft or Uber driver.

tzs 7y ago

I wonder if this is legal? With the drivers classified as independent contractors rather than employees would cooperation between drivers to manipulate prices run afoul of antitrust law?

codedokode 7y ago
Is not a ridesharing company the one who sets and manipulates the prices?

exabrial 7y ago

This is hilarious. Props to the drivers. Capitalism at it's finest: assumption of information imbalance. If uber and lyft do nothing, this behavior will autocorrect itself: expect a few drivers to rebel/revolt after the news of the behavior spreads. Keeping the secret will get harder and harder.

zentiggr 7y ago
But it doesn't have to be secret, ad defectors only hurt themselves by accepting lower pay for the same fare. That seems like a strong incentive to play along.
- exabrial 7y ago
  Exactly, but at some price point, for a certain individual, the acceptance of the lower fair is a better deal to bc of a guaranteed outcome.

Causality1 7y ago

Seems like a small software tweak is all it would take to obliterate this tactic, like updating surge pricing every time a driver logged in.

lr 7y ago
The whole point of surge pricing is to get more drivers on the street. If they decrease it that quickly, then there is zero incentive for a driver to leave their house and get in their car and get out on the street, because by the time they do that, the prices are back down.
- sly010 7y ago
  In fact I am surprised it reacts as fast as the article describes.
  - jakelazaroff 7y ago
    I assume it's a combination of that and the sudden demand of a plane full of people all opening up their apps to look for a ride simultaneously.
- papln 7y ago
  Uber can predict that the drivers are at the airport -- they were logged in when they dropped off a fare, possibly when they were already in line at the cab stand, and also Uber can use a bit of common sense.
- asdff 7y ago
  I'm fine with it. Airports are the worst sort of fares a driver could take, people could get dropped off deep in the suburbs and the driver has to take 20 mins to get back to the city where people are actually calling rides. Occasionally these distant drivers will try to snipe me too while they are out there, probably hoping I'm too drunk to notice that they will take 20 mins to arrive. It's fickle work.

deleted 7y ago

[deleted]

cypherpunks01 7y ago

This is really curious, in that it appears to be a normal strike for higher wages, except it's being coordinated on an hourly basis for just a few minutes until the company agrees to pay more! Contractors can decide when and how they want to work, and therefore determine the price at which to sell their labor at, so to me it seems they are simply exercising their rights here. Like others have mentioned, if most drivers don't choose to participate, then this "scheme" wouldn't function.

rosege 7y ago
Not 100% sure I'd call it a strike but its just the free market working quickly. I have a feeling though this will spread around the world and be adapted by drivers in many other countries. I've traveled a bit in South America and Uber drivers there really do earn barely anything - I dont know how they afford the gas - e.g. 1/2 hour trip for $3-$4.
- laken 7y ago
  I've also traveled in South America and relied on Uber heavily. I talked with a few drivers, and they all found Uber to actually be worth it. For example, Colombia's minimum wage when converted to 40hrs/wk/month comes out to ~$1.50/hr. It's not a bad gig there, and the cost of living is relatively low. The bigger problem is the danger of driving for Uber, as taxistas are not a fan of Uber drivers.

peterwwillis 7y ago

The only economic model that make Uber and Lyft make sense is if drivers are willing to take low pay (considering all their other costs). If they make more money than cab drivers, the whole model falls apart, because then cabs will be cheaper and the service won't be competitive. (Granted, the lack of having to pay for medallions saves them a bunch of money) I think the only long-term business plan that makes sense for them is black cars, or people who don't want the hassle of Taxis.

sundaeofshock 7y ago
Keep in mind that uber was successful early on not because of price, but because it was significantly more reliable then a cab. I was willing to pay a bit more then a cab to get to the airport because I knew I could count on that uber to arrive at my house on time. Uber and Lyft are not trying to be cost competitive with cabs; they are trying to be cost competitive with public transit.
- taormina 7y ago
  I'm still convinced that the only innovation that ever happened in this space by Uber was the guaranteed ride. They chose to fight (ok, ignore) the taxi regulations, but from a features perspective the taxi apps already did all this. The difference was that any random person off the street could still flag your cab so in practice you rarely got a taxi if you weren't in a "hot spot". Reliability matters.

jermaustin1 7y ago

I'm not a lawyer, nor do I agree with what I'm about to say, but the drivers need to be careful, because they might run afoul of collusion. Since they are all independent contractors, they are "rivals" in the same industry, so with all of them cooperating to increase fares for their benefit (and based on my understanding of the law), they are technically colluding.

ceejayoz 7y ago
They should just form a union. Contractors can form one - they don't get all the privileges (for example, the employer isn't legally required to bargain with them, and can retaliate against strikes) but it'd probably permit this sort of short-term work stoppage.
- jermaustin1 7y ago
  Depends on the state, but federally, independent contractors are excluded from the right to form or participate in unions as defined by the National Labor Relations Act. EDIT: independent contractors are excluded from the protections of their union actions.
  - ceejayoz 7y ago
    https://cwa-union.org/about/rights-on-job/legal-toolkit/my-employer-says-i-am-independent-contractor-what-does-mean https://cwa-union.org/about/rights-on-job/legal-toolkit/my-e... > As an independent contractor, the terms and conditions of the work you perform are set out in a contract between you and the employer. Even though you are not considered an “employee” under federal labor law, you may still join a union. However, you should keep in mind that a unit of independent contractors is not subject to the same privileges and protections as a regular union bargaining unit. For example, an employer is not under the same obligation to bargain with a union regarding contract terms for an independent contractor that it is to bargain over issues affecting its regular employees. Also, an independent contractor who went on strike would not be protected from employer reprisals under the National Labor Relations Act. Plenty of contract plumbers, electricians, etc. are members of unions.

radcon 7y ago

This seems like it could also torpedo their Contractor vs. Employee argument. Contractors get to set rates, employees don't. So you can't say they're contractors AND accuse them of committing fraud when they try to set their own rates. Now if only someone would develop an app that does this for entire cities. The app could be their version of a union.

leereeves 7y ago
Under the theory that Uber/Lyft employees are contractors and allowed to set prices, wouldn't coordinating ("conspiring") to do so en masse be considered price fixing? Personally I think they should be considered employees, but a pro-management federal prosecutor could make some trouble for them.
- dpflan 7y ago
  This is an interesting dynamic - the colluding drivers wait for Lyft/Uber to determine the surge pricing and the point-person for the drivers informs of the price increase to a target that is acceptable. Now how does the pricing affect the demand for the rides? Will a Lyft user switch to Uber if the collusion is affecting only 1 application (vice versa too)?
- calimac 7y ago
  would they have to have more control over the liquidity of the market to be price fixing?
- codedokode 7y ago
  I don't think they are allowed to set prices. Furthermore, they are probably somehow punished if they don't accept the orders that app offers.
  - gsnedders 7y ago
    They aren't, and the furthermore is also true beyond a certain percentage. This is part of the reason why in a number of jurisdictions the courts have ruled that the drivers aren't independent contractors.

kdot 7y ago

What's the rational for percentage based fees? The technology cost for a 4 mile ride is the same for a 50 mile ride.

eropple 7y ago
"Because they can." That's really all they (and, to be honest, most "marketplace" tech companies) need to say. They have the customers; here are our terms. It kinda really sucks, because the quality incentive goes out the window.
Donald 7y ago
An imbalance of power between a a $70 billion dollar company like Uber and folks who need an extra $200/week to make rent. Also keep in mind that even at these fee levels, Uber and Lyft are somehow not profitable.
icebraining 7y ago
> The technology cost for a 4 mile ride is the same for a 50 mile ride. Technically no, the real-time tracking requires constant data streaming to and from their servers, proportional to the duration of the ride. But a more likely answer is that a fixed amount per ride makes short rides prohibitive or at least less appealing. And if you think about it, much of the costs are probably fixed (across all rides), so you could say they should charge $millions to the first ride, then just charge marginal costs for the others. Dilution of costs across purchases is an indispensable part of doing business.
Jommi 7y ago
It's not just percentage based. There is a fixed booking fee sometimes as well.
- asdff 7y ago
  Some cities seem to get far better rates too. In Boston most of my trips were around $4-5, maybe closer to $15 to get to logan. When I was in Columbus it was like the trips were arbitrarily twice as much, hovering $7-10 for similar distances. Miami probably had the highest rates I've experienced (Like $25+ to get to the other side of the biscayne bay), traffic was terrible as well so I wasn't as shocked, but it seemed much higher than going a similar distance in LA. I was still able to get rides in 10 minutes in most cases everywhere, so it wasn't for lack of free drivers, it seemed.

calvinbhai 7y ago

This is an age old hack. I'm not sure why this is being reported as new. They did this since the early days of Surge Pricing.

duxup 7y ago

This seems like a logical outcome considering the company and contractors have an increasingly disconnected and at times adversarial relationship. The entire gig economy is based on shifting risk onto the contractor (demand changes, benefits, protections regarding injury / illness)... and to some extent onto the consumer too.

ackbar03 7y ago

Oh man these guys think this is fraudulent? They should come to China. When rebates were all the rage, where the ride hailing companies would pay drivers subsidies, they developed software that could fake the GPS address on the phone and pick up fake rides without actually driving and get massive rebates

CPLX 7y ago

When low paid workers coordinate their efforts to increase their pay it's called an "artificial price surge" and allegations of fraud are thrown around. When highly paid executives, investors, and board members coordinate their efforts to increase their pay what does the media call it?

iscrewyou 7y ago
innovation
6gvONxR4sf7o 7y ago
Price fixing, predatory pricing, bid rigging, collusion.
zentiggr 7y ago
VC driven exit strategy
kevinmgranger 7y ago
Indeed. I never understood how coordinated bargaining is "artificial" but the decisions about how much profit goes towards the workers versus executives is somehow... "natural"?
hawaiian 7y ago
Growth
klyrs 7y ago
Neat trick that shareholders hate!

rrival 7y ago

Experienced this at LAX - another driver called my driver, commenting "It's at 3.5!!" - well played, I don't fault them for this at all.

codedokode 7y ago

I don't like the word "manipulating". It is like a trade union negotiating better terms. If they do it voluntarily without intimidating the drivers then I don't see any problem. They should not feel guilty. Also, in a Lyft's statement: > Over 75% drive less than 10 hours a week to supplement existing jobs. I wonder, are those 75% working part-time or full-time? It must be tiring driving 2 more hours after 9-hour working day.

llamataboot 7y ago

Few things interesting here - One is that the workers are getting paid more per the algorithm that these companies designed to charge customers - that is, they are getting the company to facilitate higher payments but the company itself isn't being charged more! So in that case, the drivers are simply arguing that uber/lyft are artificially undervaluing their time because clearly these passengers are willing to pay 15% more to them to get home... -- It is telling to me how often Lyft/Uber/et all emphasize that their philosophy is that these gig economy jobs are just something you do a tiny bit extra to get some extra cash in your pocket. That is they are designed to be a small supplement to the job that provides you with most of your income, so hey, we don't really have to worry about working conditions, etc. But I'm not sure I believe their stats. Over the past few years it is nearly 100% of the drivers I get that are doing it full-time, and many/most of the "teacher moonlighting for extra vacation money" type drivers have given way to lots of former actual taxi drivers who quit their taxi company and now work both uber/lyft.

nabergh 7y ago
I wouldn't be so convinced that passengers are willing to pay these surge prices to go home. Sure, the first time a passenger encounters this artificial surge, they're already planning on taking uber/lyft home so they'll pay it because they probably don't have another option immediately available. But the next time a passenger arrives at DCA (could be a month or two), they might remember uber/lyft is expensive when they land so they would have arranged a different option to leave the airport. Consumer reaction to prices changes may not always be immediate. These drivers are operating in their own interest in the short term but who knows if they are in the long term.
- cpitman 7y ago
  100%. I fly out of DCA/IAD, and each time weigh the options of parking at the airport and taking a rideshare service. Last time I used Uber from DCA it was much more expensive than I expected, and have been parking there since.
- llamataboot 7y ago
  Well, there's always the immediate option of a regular taxi! But yes, sure, who knows, but isn't that the point the free market fundamentalists often make about price clearing? Supply and demand will somewhere theoretically clear each other and maybe it's always a dance around that spot, but in this case the drivers are using the algorithm to try to find the best price they can get for their service, rather than let Uber/Lyft determine it artificially. I just don't understand why when capital sets the "price" of labor, it is considered free market ("No one forces anyone to drive for Lyft") even though many people literally have a choice between working or starving, which isn't much of a "free choice". But when labor tries mechanisms to find a new price, it's "collusion" and "gaming the system" -- After all, even in this, there is always room for "defectors" to take the passengers that wouldn't use the higher rate!

zone411 7y ago

All this discussion about employee/contractor situation or possible collusion won't matter after Uber/Lyft close this loophole and this can be done easily. It makes no sense that the drivers would allow the reporter to publicize this trick.

dmbaggett 7y ago

I've definitely experienced this at DCA, and it's worth nothing as well that it sometimes take hours to get out of the airport due to the insane traffic jams right around the terminals and in the parking garages. DCA has gone from my favorite airport to literally my least favorite over the last year or so. I've been using Dulles instead even though it's way less convenient.

Terretta 7y ago
I’m trying to figure out how to define “way less convenient” in a way that has you choosing to use it instead. :-)
- dmbaggett 7y ago
  It's many miles farther -- but I then don't get stuck at the airport for two hours Friday night. Also, DCA is great when you're inside while IAD is the usual huge-airport security nightmare.
momokoko 7y ago
DCA is also one of the easiest airports in the US to access the metro(public transit) out of the terminal. Is there a reason you just don't hop on the yellow line and get off at a less congested stop closer to your final destination?
- cpitman 7y ago
  Metro's hours are usually the problem for me, usually getting to the airport after the last train has left.
  - momokoko 7y ago
    Absolutely, but in that case, the issue about extreme traffic congestion is much less likely. Even though traffic in the area can be difficult at times, 1AM seems like an unlikely time to run into that.

mimixco 7y ago

Both companies claim that drivers are independent contractors who can drive when and where they want, so how can they say that these drivers are in violation of anything?

awake 7y ago

I’ve heard about this tactic from people working at Uber years ago. I think they’re aware that it happens. The way it was described to me is the Ubers are in a line at the airport and each car signs off except the very first. That way rides keep coming and the first person in line gets surge pricing

papln 7y ago
This seems easy to fix on Uber/Lyft's side --- to recognize that they don't need to maintain book depth. At the airport, since passengers are effectively queued up.

Shivetya 7y ago

I have no issue with them not being available and having rates go up. that is what they system should do. I know uber/lyft drivers that turn off the app after drops off in areas they like being so that they don't get prompted to take a nearby fare. I do find it annoying that these drivers are upset at the fees. Look, before then all you could do is work for a taxi service and they make uber and lyft look like saints for the most part. you are free to work for whomever you want and you got into the deal knowing what it was.

jakelazaroff 7y ago
> You are free to ride with whomever you want, and you got into the deal knowing what it was. This cuts both ways, though. Taxis still exist! If you don't want to take Uber or Lyft, you are free to take a normal taxi, use public transportation, arrange your own ride, etc.
- diminoten 7y ago
  Or use one of the dozens of local competitors that are popping up.

rmrfrmrf 7y ago

Unionization and striking for the gig economy. You love to see it!

bradleybuda 7y ago

I’ve always been fascinated by the way Uber has implemented their market dynamics using surge pricing. Uber isn’t a market for rides in the way that, say, a stock exchange is a market for stocks. There aren’t drivers setting their asking price and riders making bids, nor is there an order book where matches are made at a clearing price, and understandably so - I can’t imagine how to build a comprehensible UX around a “true” bid-ask marketplace. Instead, Uber presumably has historic estimates of the supply and demand curves at different locations, different times of the week, different passenger / rider populations (business travelers or tourists?) and then uses the measured “true” supply and demand to find a clearing price, and therefore decide whether or not a market is going to surge. The UX of surge is important too - the raison d’être of surge pricing is to bring more drivers to an undersupplied market. That means that when you detect a supply or demand shock that would lead to surge pricing, you want to increase the surge as quickly as possible to send out the “we need more drivers” signal, because there’s a latency in getting more supply (drivers have to relocate). Conversely, Uber doesn’t want to drop the surge price too quickly - they want downward movement to be sticky - because you don’t want to tell drivers “there’s more money to be made over here” just to renege on that promise before the supply can even get there. So if surge is sticky on the way down, these drivers may have found a way to exploit the pricing algorithm - simulate a price shock then reap the rewards. If surge were not sticky on the way down, this strategy might be much less effective - a few drivers would get better fares, but the market would return to equilibrium faster. None of this is to say that you can’t have cartel behavior in a “bid-ask”-style market too, but I suspect this is a “hack” of Uber’s pricing UX as much as anything else.

ikeboy 7y ago

They can just counteract this by refusing to turn on surge pricing if they detect a large number of drivers disappearing if they predict that they'll come back shortly. Should be easy to predict that pattern and counteract it, unless the drivers are willing to skip work for an extended period of time.

freeflight 7y ago
But why should they? Both Uber and Lyft also profit from this because in the end it's the customers who pay the difference. So I don't really see either of these companies wasting time and effort on fixing this "problem".

deleted 7y ago

[deleted]

sharadov 7y ago

Human dis-ingenuity has to be admired, beautiful!

traeregan 7y ago

https://callaride.com https://callaride.com is launching next month (local to the Tampa Bay, FL area only for now), and one of their key differentiators is giving drivers the ability to set their rate. There will be minimums and maximums in-place, but they will have more control than with Uber or Lyft. Note: I am a third-party PM working with the web and mobile application teams.

40acres 7y ago

Don't Uber and Lyft lose on every ride? I wonder if the increased fair caused by this cooperation makes the average ride profitable. Perhaps the price of a ride is more elastic than Uber and Lyft think? Especially at airports.

diydsp 7y ago

Why does everyone assume the workers are screwing Uber/Lyft? Uber/Lyft make more money this way. The passengers are getting screwed.

chrischen 7y ago

I think many people are missing some facts from the article. They aren’t so much going on “strike” as they are just turning off their apps on masse 5 minutes before plane lands to trigger surge pricing, and then turning back on to catch the passengers at surge pricing. Obviously customers are still choosing to accept such fares, but may not know that the real price (if they wait a bit) would be much lower.

smadge 7y ago

“Over 75% drive less than 10 hours a week to supplement existing jobs. On average, Lyft drivers earn over $20 per hour.” These statistics could be very misleading. For example let’s say one driver works 4 hours, another 6 hours, another 10 hours with all three making making $25/hr and the final one works 80 hours making $10/hour. In this scenario 75% of drivers are driving 10 or less hours a week and the mean driver hourly rate is over $20. However 80% of the hours driven are by one driver making $10/hour. This one driver is clearly the workhorse of the ride-sharing company making the bulk of the profit.

sfifs 7y ago

I've seen something like this predictably happen with Grab in my office area in Singapore. At 5 you suddenly can't get cabs. You can at 4:55.

asdffdsa 7y ago

Ahh, the qualities of competitive markets. If theres antitrust laws, there should be similar policies from the workers' side as well.

colejohnson66 7y ago
So we should go after strikers because they’re depriving their employer of money?