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FTC takes action against Uber for deceptive billing and cancellation practices

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Re: FTC takes action against Uber for deceptive billing and cancellation practices

#221

Post by lurk2 »

NoTeslaThrow wrote: post #156
csharpminor wrote: post #80

Earlier quoted context omitted.

Another sketchy practice: if you get Uber Cash through a card like Amex, when you go to use it the price for the ride is automatically $15-$20 more than someone who doesn’t have an Uber Cash balance. I’ve checked this side by side with colleagues at the airport getting ride quotes to the same hotel. When you have Uber Cash they will quote you more. You can find numerous Reddit threads on the topic as well. This feels…

I have heard a lot of people speak about dynamic pricing, but I have yet to hear any benefit to the consumer or society as a whole. Basically any possible pitch for it is worse in every way than simple downward wealth redistribution.

Surge pricing in theory incentivizes more drivers to operate during peak times, reducing wait times for passengers. If you’ve used these kinds of apps in regions where they aren’t popular, it can be quite common to not have anyone pick up your fare.

If you could bid up the price, you would be more likely to incentivize any idle drivers to pick up your fare. A driver might not be willing to get out of bed for a $10 fare, but the same driver might be willing to get out of bed for a $30 fare.

Re: FTC takes action against Uber for deceptive billing and cancellation practices

#222

Post by lurk2 »

NoTeslaThrow wrote: post #175
nradov wrote: post #172

Earlier quoted context omitted.

Prices are always dynamic in every business. The only difference is in how frequently the price changes. If you take your idea to the logical extreme then you're essentially arguing for permanently fixed prices. This is one reason why it's sometimes impossible to get a taxi in places where the rates are fixed by government edict.

I don't think we're referring to the same concept. Dynamic pricing implies charging two different concurrent customers different prices for the same good or service. The only place you can see this now are basically reward/promo/point programs, which while also gross (basically, making transactiobs cheaper for the rich) at least seem to have some proponents.

> Dynamic pricing implies charging two different concurrent customers different prices for the same good or service.

That is price discrimination, not dynamic pricing. Price discrimination involves charging more or less based on the buyer’s perceived willingness and ability to pay. Dynamic pricing is based on fluctuations in consumer demand. A taxi ride at midnight is not the same as a taxi ride at noon; if there are proportionally fewer drivers available at midnight, fares will be higher at midnight.

The same principle may be applied in the restaurant industry; kitchen throughput has limits. If these limits are reached during peak hours, the restaurant can either raise prices during these hours or reduce prices outside of these hours to spread out the consumer demand, maximizing earnings during peak times while reducing kitchen idle time during off-peak hours.

Re: FTC takes action against Uber for deceptive billing and cancellation practices

#223

Post by ac29 »

dkrich wrote: post #129

I’m bearish on uber because despite all of these shady tactics they are still barely profitable at the current scale and with enormous tailwinds. Last quarter they made $770 million on $12 billion of revenue. It’s just a lousy business model and they are desperate to beat Wall Street’s ever inflated expectations each quarter.

> Last quarter they made $770 million on $12 billion of revenue.

Well, keep in mind that 7 of that 12 billion went to cost of revenue (aka money paid to drivers etc). Turning a $770M profit off the remaining $5B isn't too bad.

Re: FTC takes action against Uber for deceptive billing and cancellation practices

#224

Post by lurk2 »

paxys wrote: post #177
NoTeslaThrow wrote: post #175

Earlier quoted context omitted.

I don't think we're referring to the same concept. Dynamic pricing implies charging two different concurrent customers different prices for the same good or service. The only place you can see this now are basically reward/promo/point programs, which while also gross (basically, making transactiobs cheaper for the rich) at least seem to have some proponents.

You are thinking of price discrimination, which is a subcategory of dynamic pricing. Changing prices based on time of day, current demand, tiers/SKUs or really anything else is also collectively dynamic pricing.

Price discrimination isn’t a subcategory of dynamic pricing. Dynamic pricing is equivalent to what is colloquially referred to as surge pricing, whereas price discrimination is based on the buyer’s perceived willingness and ability to pay.

Dynamic pricing could technically fall into the category of price discrimination if the discrimination is temporal (e.g. people who need a taxi at 8:00 AM pay more than people who need a taxi at 8:00 PM), but generally price discrimination refers to changes in price based upon anticipated demand, whereas dynamic pricing refers to changes in price based on actual demand.

Re: FTC takes action against Uber for deceptive billing and cancellation practices

#225

Post by lurk2 »

dheera wrote: post #203
csharpminor wrote: post #80

Earlier quoted context omitted.

Another sketchy practice: if you get Uber Cash through a card like Amex, when you go to use it the price for the ride is automatically $15-$20 more than someone who doesn’t have an Uber Cash balance. I’ve checked this side by side with colleagues at the airport getting ride quotes to the same hotel. When you have Uber Cash they will quote you more. You can find numerous Reddit threads on the topic as well. This feels…

I remember the days when Uber prices from SF to anywhere on the peninsula would suddenly spike exactly a minute or two after each Caltrain departed. If you just missed the train you paid a lot more. And then the many times that Lyft violated the triangle inequality in pricing: Ride from A->B followed by a ride from B->C was often cheaper than a direct ride from A->C, if you knew how to pick B correctly. I once confus…

> If you just missed the train you paid a lot more.

That doesn’t strike me as malicious. If you just missed the train, other users probably did, too.

How did you find the price differentials with Lyft?

Re: FTC takes action against Uber for deceptive billing and cancellation practices

#226

Post by AlchemistCamp »

paxys wrote: post #166
NoTeslaThrow wrote: post #156

Earlier quoted context omitted.

I have heard a lot of people speak about dynamic pricing, but I have yet to hear any benefit to the consumer or society as a whole. Basically any possible pitch for it is worse in every way than simple downward wealth redistribution.

Going by pure economic theory "dynamic pricing" actually benefits both buyers and sellers in a marketplace. There are plenty of cases where it makes sense – lunch menus at restaurants, grocery store coupons, retail bargain bins, dollar menus, happy hour deals, senior/youth/student discounts, even surge pricing in Uber & Lyft. Of course like with every aspect of economics how something is implemented matters a lot mor…

Yes. This is why getting an Uber is merely expensive instead of impossible on rainy days or on New Year's Eve.

Dynamic pricing makes it possible for both riders and drivers to respond to changes in supply and demand. If prices were static, many drivers would prefer to go to a New Year's Eve celebration themselves than work, but when it becomes their biggest paying shift of the year, they're a lot more willing to do it. Riders have to pay a bigger price if they want a ride at peak times, but it's still possible to get one when they really have a strong preference to.

Re: FTC takes action against Uber for deceptive billing and cancellation practices

#227

Post by lurk2 »

ryandrake wrote: post #167
teeray wrote: post #58

Earlier quoted context omitted.

The worst thing is that you can't even do a chargeback, otherwise you get banned. There is no recourse for the consumer. If this is their solution for fighting chargebacks, they should get banned from accepting Visa / MC / AMEX.

If you are at the point where your only option left is a chargeback, that is a “burning the bridges” moment anyway. Why would you want to continue doing business with a company that treats you like that? I would be grateful to be banned: it means I don’t have to go to the trouble of canceling my account. I’ve had to do a handful of chargebacks and I don’t know or care whether they banned me: I would never voluntarily…

> Why would you want to continue doing business with a company that treats you like that?

They might have a practical monopoly on these services. Most cities are going to be serviced by only Lyft and Uber, with one having more drivers than the other. If you get burned by both services due to their refusal to provide adequate customer service checks on automated systems, you initiate two chargebacks and then lose your ability to call a cab until you pay them the money on the chargeback.

Re: FTC takes action against Uber for deceptive billing and cancellation practices

#228

Post by nothrabannosir »

jowea wrote: post #202
paxys wrote: post #166

Earlier quoted context omitted.

Going by pure economic theory "dynamic pricing" actually benefits both buyers and sellers in a marketplace. There are plenty of cases where it makes sense – lunch menus at restaurants, grocery store coupons, retail bargain bins, dollar menus, happy hour deals, senior/youth/student discounts, even surge pricing in Uber & Lyft. Of course like with every aspect of economics how something is implemented matters a lot mor…

Wouldn't perfect individualised dynamic pricing mean that the seller (Uber in this case) would get to capture the entire consumer surplus? Is that good?

Ideally the remedy is competition.

Re: FTC takes action against Uber for deceptive billing and cancellation practices

#230

Post by dkrich »

ac29 wrote: post #223
dkrich wrote: post #129

I’m bearish on uber because despite all of these shady tactics they are still barely profitable at the current scale and with enormous tailwinds. Last quarter they made $770 million on $12 billion of revenue. It’s just a lousy business model and they are desperate to beat Wall Street’s ever inflated expectations each quarter.

> Last quarter they made $770 million on $12 billion of revenue. Well, keep in mind that 7 of that 12 billion went to cost of revenue (aka money paid to drivers etc). Turning a $770M profit off the remaining $5B isn't too bad.

The point is more about the profit for a company operating at massive scale- over 100 million users- and after pulling every lever to max out profit they possibly can- is only $770 million.

There was something of a red flag in that last report as well in that for the first time as far as I can tell, profit grew exactly in line with trips and gross bookings. What that implies is that the unit economics are maxed out. The business is as profitable as it can be and their only hope is to add more riders.

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