Drivers for Uber and Lyft admit to manipulating the ride sharing apps so that customers will have to pay for a price surge.
A group of up to 150 drivers routinely use the trick while waiting in the parking lot for passengers at Reagan National Airport in Arlington, Virginia.
The drivers artificially inflate the fare by simultaneously turning off their apps for a couple of minutes.
This tricks the app into thinking that there are no drivers available, which leads to a ‘price surge.’
Surge pricing is a method used by businesses whereby an algorithm determines the cost of a product based on market demand at that particular moment.
When the surge goes into effect, the drivers then reactivate the apps in order to lock down a higher fare, according to WJLA-TV.
‘All the airplanes we know when they land,’ said one of the drivers.
‘So five minutes before, we turn all our apps off all of us at the same time.
‘All of us we turn our apps off.
‘They surge, $10, $12, sometimes $19. Then we turn our app on
‘Everyone will get the surge.’
The same driver describes how they coordinate with one another to fool the apps.
‘Someone is standing by that corner,’ the driver says.
‘I stand by this corner and the other one stands at this corner and we say turn the app off and then go online.’
Just moments after the apps are turned off, drivers can monitor the extent to which the prices surge.
‘It’s still going up. It’s still going up,’ one of the drivers says.
‘It’s 13 still going up, it’s still going up. It’s 13. Don’t go on yet! You up?? Refresh it!’
In less than two minutes, the fare increases by $13.
‘When we find out what the highest surge is, that’s when we say everybody on,’ the ringleader says.
‘And that’s when everybody gets paid what we think we should be getting paid.’
‘It’s like we work as a family, like a team together. Like as a team.
‘We do it. Every night. We do it again.
‘We drop off, come back again, it’s a routine. We do it to 12 o' clock.’
The drivers say that the insufficient pay they receive from the companies are forcing them to pass on higher costs to the consumer.
‘Uber doesn’t pay us enough, what the company is doing is defrauding all these people by taking 35-40 percent,’ said one driver.
Another driver added: ‘They are taking all this money because there’s no system of accountability.’
The drivers interviewed by WJLA-TV say that they have had to take pay cuts for three straight years.
Lyft released a statement saying: ‘Lyft takes any allegations of fraudulent behavior very seriously as it violates our community guidelines and can lead to deactivation from the Lyft platform.
‘Lyft drivers’ hourly earnings have increased 7% over the last two years, and they have earned more than $14B since we launched.
‘Over 75% drive less than 10 hours a week to supplement existing jobs.
‘On average, Lyft drivers earn over $20 per hour.
‘We know that access to flexible, extra income makes a big difference for millions of people, and we’re constantly working to improve how we can best serve our driver community.’
Uber said in a statement: ‘At Uber, we work to ensure the reliability of our service for our riders and drivers.
‘This behavior is neither widespread or permissible on the uber platform, and we have technical safeguards in place to help prevent it from happening.’
Earlier this month, Uber drivers in London and major U.S. cities held a series of strikes to protest the disparity between gig-economy conditions and the sums that investors were expected to make in the company’s blockbuster stock market debut.
Protests were sparsely attended in London, New York and California, and rides appeared easily available in some cities where strikes were called.
Drivers and regulators around the world have long criticized the business tactics of Uber Technologies Inc.
Many drivers work part time for the services and often divide their time between platforms, delivering food and goods as well as giving rides.
Uber has steadfastly, and mostly successfully, beaten back attempts to compel it to treat drivers as employees, arguing that its main business is a platform that brings riders and drivers together.
And the money-losing company is under pressure to cut costs.
Many drivers want better pay from Uber rival Lyft as well.