Rideshare companies use AI to tap Colorado riders and drivers

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(Colorado News Connection)
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Uber and Lyft are using algorithms that charge customers significantly different prices for the exact same ride, according to a new investigation by Consumer Reports.

Volunteers requested numerous rides from the same location to the same destination at the exact same time but fares differed by an average of 50%, the report found.

Rachel Dempsey, associate director of the Colorado advocacy group Towards Justice, said one problem is rideshare companies are not required to disclose what factors determine how much riders pay.

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“They could potentially be using things like how much phone battery you have left, how far you are from home,” Dempsey outlined. “Things like that, I think, make consumers really vulnerable to being charged excess prices for the services they need.”

Not unlike surge pricing for concert tickets, hotel rooms and even groceries, the report suggested Uber and Lyft algorithms are programmed to calculate the maximum amount consumers will pay.

Uber and Lyft have questioned the report’s methodology and conclusions, and said any price variations are based on real-time marketplace conditions. The companies said they do not personalize base fares for individuals or engage in behavioral or surveillance pricing.

Consumer Reports found Uber and Lyft use similar algorithms to calculate how little pay workers will accept. Investigators found drivers are routinely offered different fares for the same ride.

Derek Kravitz, deputy editor of special projects for Consumer Reports, said drivers’ share of the total fare paid by riders has dropped to as low as 45%.

“Drivers are making less and not necessarily keeping up with the rate of inflation, or how much the passenger fares are going up,” Kravitz said. “So all of this is putting a squeeze on both passengers and drivers, and resulting in a lot of increased profits for Uber and Lyft.”

Dempsey pointed out there are tools available to rein in rideshare companies, noting federal agencies could enforce laws already on the books, including truth in advertising violations if companies inflate pricing discounts. Dempsey added cities and other municipalities can enact policies to protect workers and consumers.

“State and local actors have a lot of power in this space too,” Dempsey emphasized. “There is a lot of room here in Colorado and even on the local level to limit this kind of worker and consumer exploitation.”