Worcester Taxi Company Criticizes Uber For Price Gouging, Undercutting Competition

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Friday, October 31, 2014

Nicholas Handy, GoLocalWorcester Contributor

Worcester area taxi drivers and companies are joining the ever-growing efforts to regulate Uber and other ridesharing companies throughout the nation because their current pricing model undercuts local taxi drivers to lure in business just to price gouge the customers that they bring in.

While any company is going to be hesitant to competition, Worcester Red Cab is growing upset and impatient because they don’t consider Uber legitimate competition because of their continued not following of local and state regulations.

“We have no having competition when it is legitimate, but Uber is not on the same playing field,” said Maggie Donovan, Vice President of Worcester Red Cab. “This is a company that doesn’t play by the rules. They undercut the prices of local taxi companies but then when taxi services are more in demand – like on weekends – they price gouge, which negatively impacts the customer because in most cases, they surcharge your payment.”

While many taxi companies throughout the United States have made the same claims, evidence from the Better Business Bureau backs it up. According to their report card for Uber, the BBB gave the company an F grade saying “some consumers claim that they were told the final cost of the transportation service the company provided (through Uber Technologies' phone app, the driver, and the consumer's receipt), only to be subsequently charged a substantially larger amount).”

Uber has also been under a lot of criticism from their drivers because the company has over-saturated the market and lowered the prices for each ride, which serves as a loss of money for the drivers themselves. Recently, Uber drivers have protested in San Francisco and Los Angeles while there have been strikes in New York and London.

Following the Rules

Much of the controversy around Uber and other ride-sharing companies comes from repeated attempts from municipalities and taxi companies to make Uber follow the rules that traditional taxi companies must abide by.

In terms of revenue, taxi companies must be upfront with their prices and cannot price gouge, meaning that the customer will immediately know the price of their rides.

“Customers should be able to know what they are going to be paying for taxi services so price surging is obviously a huge concern to customers,” said Stephen Regan, a spokesperson for the Massachusetts Regional Taxi Advocacy Group. “Taxis are regulated and cannot do surge pricing, so neither should companies like Uber. Even the drivers themselves have been subject to unfair business practices; Uber is flooding the market for everyone.”

Lower Prices = Increased Demand

While there has been much negative attention paid to price gouging customers, undercutting established taxi companies, and workers outraged with being paid much less than Uber reports to the media both locally and internationally, Uber insists that its business model is working to the benefit of both employees and consumers alike.

While the company admits that they do price gouge during busier parts of the day, they claim that their app reflects all costs at the time of purchase. Additionally, Uber has made rates cheaper for customers overall – which means Uber drivers are being paid less – but the company says that the lower rates mean higher demand for services, meaning that drivers have the potential to make more money than ever.

“What we've seen in cities across the country is that lower prices means higher demand, resulting greater earnings for our partners” said Taylor Bennett, a spokesperson for Uber. “This higher rider demand will help drivers stay busier during the normal hours they're online, and to spend more time on the road earning fares and less time waiting for requests, therefore earning as much money or more in the same amount of time.”

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