Advertisement

Toronto subway shutdown puts Uber’s surge pricing model in spotlight

File photo.
File photo. AP Photo/Mosa'ab Elshamy, File

TORONTO – As thousands of Toronto commuters found themselves stranded during the morning rush hour Monday following a massive subway disruption, Uber’s surge pricing kicked into effect.

READ MORE: Late start to Monday after TTC subway lines suspended

Under surge-pricing, also known as dynamic pricing, the ride-hailing service uses an algorithm to lure more drivers to areas where demand is particularly high by increasing the rates in those areas.

The practice has incited controversy among some users who have called it “price gouging.”

Some tweeted that Uber was charging up to four times the usual rate in some parts of the city.

But Uber spokeswoman Susie Heath says that as soon as the company became aware of the transit shutdown, it capped its dynamic pricing at three times the normal rate.

Story continues below advertisement

Heath says Uber always communicates to users that surge pricing is in effect.

Sponsored content