Price gouging or buyer beware? Uber's New Year's Eve rates anger passengers

Uber says it uses surge pricing to convince drivers to stay on the road during peak times.

Many who used Uber on New Year's Eve found themselves in shock when the bill was more than they bargained for.

The controversial car service app often increases its prices during times of high demand, but on Dec. 31, that fare hike made a ride home in some case more expensive than a hotel room.

Without any luck hailing a cab, Miria Blanco and Veronica Iafrancesco tried to use Uber for the first time. They noticed a message telling them it was surge pricing.

“We saw a surge, but we didn't know exactly what it was, so we just asked the guy, ‘We said how much would the estimate be? And he said, ‘It’s around $100,’” said Blanco.

The surge was 7.5 times the normal price, costing almost $630 to go from downtown Montreal to Laval.

“$600 dollars for a taxi,” said Iafrancesco. “We might as well have just rented a room at that point.”

Uber said New Year's Eve is its busiest time of the year, offering millions of rides around the world.

But early in 2016 many of those customers took to social media to complain, some claiming they paid more than $1,000 for a lift home because of surge pricing.

Uber said it uses surge pricing during periods of high demand as an incentive to keep more of its drivers on the road. Customers are informed of increased pricing by notifications through the Uber app.

“It's really ridiculous and basically out of my expectation of what I would pay to get home safely,” said Cassandra Zakaib, who argues that Uber surge pricing violates her rights as a consumer.

After filing a complaint, she did receive a 25 per cent refund of her $320 fare, but said it barely makes a dent in her 500 per cent price increase on New Year's Eve.

“I feel like I was robbed and that they knew people would be under the influence and so that they are taking advantage of people in a vulnerable situation,” said Zakaib.

CTV technology expert Carmi Levy said the smart phone app warns consumers before they accept the fare and it is up to consumers to understand the terms of agreement.

“Like any other consumer product or service, it is buyer beware. Before you pull out the app you should read what you’re getting into so that when you get into the vehicle and it’s time to pay, there are no nasty surprises,” he said.