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Another Black Eye For Uber’s Surge Pricing Model

Uber charged customers fleeing the Sydney hostage crisis four times the normal amount.

Another Black Eye For Uber’s Surge Pricing Model
[Photo: PETER PARKS/AFP/Getty Images]

Uber, a company not exactly known for endearing itself to its enemies during times of crisis, has another kerfuffle on its hands.

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In Sydney, Australia, as locals fled a police-locked area surrounding a popular cafe where at least one armed individual was holding several civilians hostage, Uber’s surge pricing model charged customers looking to escape to safety four times the normal amount.

To its credit, Uber quickly remedied the situation and offered free rides to anyone looking for a get home.

In a statement cited by the New York Times, Uber acknowledged the flub, but argued that surge pricing–automatic, temporary price increases in response to higher demand–is a necessary part of how the service works. “Surge pricing is algorithmic and responded automatically to the large increase in demand for Uber rides out of the C.B.D.,” said the company, referring to the central business district. “As soon as we became aware of the situation, we capped it and made all rides free to people leaving Sydney’s C.B.D. Uber is paying for these rides. If riders got charged surge pricing earlier, we will refund it.”

The hostage standoff exposed surge pricing’s critical flaw. Uber says the cost structure is simply a matter of supply and demand, and is an effective way to get more drivers on the road during unusually busy times. Earlier this year, Uber CEO Travis Kalanick defended the practice, arguing that it is a necessity for determining a given trip’s market price.

It’s the second time in as many days that Uber, flush with a recent $1 billion funding round, has found its model under siege. Last week, critics skewered Uber after it charged San Francisco residents 3.8 times the normal amount during the biggest storm to hit the Bay Area in half a decade.

Here’s Uber’s blog post in response to the Sydney hostage standoff:

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We are all concerned with the events happening in Sydney.

Uber Sydney will be providing free rides out of the CBD to help Sydneysiders get home safely.

Our thoughts are with those affected and the NSW Police Force.

We are in the process of refunding rides. If you have been charged during these hours leaving the CBD please email supportsydney@uber.com.

Please note that surge pricing is used to encourage more drivers to come online and pick up passengers from the area.

Updates will follow on Twitter – @Uber_Sydney

*Maximum one trip per person

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About the author

Chris is a staff writer at Fast Company, where he covers business and tech. He has also written for The Week, TIME, Men's Journal, The Atlantic, and more

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