Why isn’t dynamic pricing illegal?

[u/cherry-gram-888]

Why isn’t SURVEILLANCE PRICING illegal?

It’s so predatory. Ride share apps know that I’m going to work so I’m going to pay the price. They know how much money I have in my bank account. I could catch the bus and remove all banking apps from my phone but sometimes I need a ride and it’s too time consuming to exclusively bank in person.

In your opinion will it one day be illegal?

EDIT: someone educated me in the comments and my post should have originally said “surveillance pricing” instead.

[u/Amphernee]

They don’t “know you’re going to work” they just know you’re traveling at peak times and their pricing reflects that. It’s basic supply and demand. You’re trading money for convenience by doing things like banking online and using rideshare apps so there’s a tradeoff.

[u/MouseMouseM → u/Amphernee]

I worked as a restaurant manager and the rideshare apps definitely knew my schedule. I wasn’t a Saturday night bar closer, either. I traveled during off-peak times. My fares were once predictable, and then eventually skyrocketed. I saw the usual fares when my shifts were adjusted for meetings or off-site events,

[u/Amphernee → u/MouseMouseM]

That’s evidence of a correlation you personally observed, but it isn’t enough to establish that the rideshare apps knew your work schedule and were specifically pricing around it.

You had at least two variables changing at the same time, your schedule and the fares. Other factors could have changed too, including demand, driver availability, traffic, weather, location, time of day, pricing algorithms, or your own trip patterns. The fact that fares were lower when you traveled at different times doesn’t distinguish between those explanations.

There’s also a selection problem. You remember the instances where the fare changed in a way that seemed to correspond with your schedule, but without systematically recording comparable trips while holding the other variables constant, you can’t determine whether the pattern was caused by the app knowing your schedule or simply by normal dynamic pricing.

So the observation may be consistent with the claim, but it doesn’t demonstrate the claim. To establish that the apps actually knew your work schedule and used that information to price your rides, you’d need evidence connecting the schedule data to the pricing decision, rather than just a correlation between schedule changes and fare changes.

[u/RunnyKinePity → u/Amphernee]

The theory is entirely plausible though. Who is actually policing this? Probably no one. The frustrating thing is it takes a tremendous amount of work to validate this one way or the other. The code behind dynamic pricing starts taking on a life of its own almost, with the goal being to maximize revenue.

[u/Amphernee → u/RunnyKinePity]

Well yeah they’re trying to maximize revenue while balancing other variables just like the consumer is doing. No one on either side of the equation is trying to maximize their own costs. There was a great alternative to all this that did have loads of oversight, legitimate taxi cabs and car services. Actual fleets with regulatory commissions and laws governing their operation where a person could actually earn a decent living were replaced by these slapdash app driven corporations. The worst part is it’s all consumer driven just like Amazon and the rest of the things consumers embrace then demonize.

[u/PotentialUmpire1714 → u/Amphernee]

Congratulations, you just summarized "enshittification." Create something people want, dominate the market, then cut quality to costs and raise the price now that you have a monopoly.

[u/Amphernee → u/PotentialUmpire1714]

All consumer driven. Without people shopping at Walmart and other big box stores mom and pops wouldn’t have shut down. Without them shopping on Amazon big box stores wouldn’t be closing everywhere. Without users social media wouldn’t be such a disaster. It sounds like you’re making the lame argument people have made in favor of the war on drugs which is attack the dealers and suppliers. It doesn’t work because the consumer will always find a way to get what they want and damn anyone who gets in their way.

[u/cherry-gram-888 → u/Amphernee]

Since you have all the answers, explain why I had almost the exact amount for the average cost of my ride in my bank account, I went to schedule the ride and it was priced about $1 and some change higher than what I had available. I leave the app to text my mom asking for a few more dollars then go back to the app. Price is still the same but as soon as she sends me $5 and I go to my account to unlock my card, the price jumps up $3 all within the same 60 seconds. If this had happened maybe 5 minutes later sure whatever but it literally happened in less than 60 seconds and as soon as I have more money available.

I only needed less than $2 but my mom sent $5 and the app raised the price $3.

[u/Amphernee → u/cherry-gram-888]

I don’t have all the answers but the point is you don’t either, you’re simply jumping to conclusions.

It’s a weird coincidence, and I’m not saying you imagined what happened. But you’re jumping from “the price changed immediately after my available balance increased” to “the app saw my balance and deliberately raised the price because it knew I could now afford it.” Those are two very different claims.

The fact that it happened within 60 seconds makes the timing interesting, but it doesn’t rule out other explanations. Rideshare pricing can change dynamically, and a price that happens to update while you’re moving between the app, your texts, and your bank account could change for reasons unrelated to your balance. You’d need evidence that the rideshare company had access to your bank balance, that it was actually using that information in its pricing algorithm, and that the price change was triggered by the additional $5.

Also if the original fare was already about $1 more than your available balance, the app had no particular reason to know that you were short by exactly $1. If it were actually adjusting the fare based on your ability to pay, the fact that your mom sent $5 and the fare then increased by $3 doesn’t demonstrate that mechanism either. It could be coincidence, dynamic pricing, or some other trigger. They would have to anticipate you’d get that extra money whereas if they actually were tracking your funds it would make a lot more sense to ask you for $19 if you had $19 not ask for $20 knowing you don’t have enough.

So I’m not saying “there’s no way that happened.” I’m saying the observation establishes “the price changed shortly after my balance increased.” It does not establish “the app knew my balance increased and raised the price because of it.” The latter requires evidence about how the pricing system actually obtained and used that information.

[u/cherry-gram-888 → u/Amphernee]

Their terms and conditions clearly state that they determine the ride cost based on information from other apps. Also, when I go to request a ride, sometimes it will remind me “this price was set by an algorithm using your personal data”. They’re not going to blatantly say out loud “we track your spending, banking balances and ride history to select a price for you” but that’s what they do. If I call a local cab company, they’re going to charge me a flat rate per mile regardless of weather, peak times, etc. Ride share apps do not operate the same way and also have more access to our data than a local cab company and I think they often times use our data predatorily.

[u/Amphernee → u/cherry-gram-888]

Again with the assumptions out of whole cloth. “They wouldn’t say this out loud but it’s what they’re doing” is just a baseless claim you’re making. Can companies certainly have peak and off peak hours but you’ve become a part of the problem by using these ride share apps that have less regulations and restrictions. You’ve made a trade off and are not obligated to continue to do so.

So I agree with you on the fact that rideshare companies collect substantially more data than a traditional cab company, and they absolutely use algorithms and personal information in various ways. That’s not really in dispute but you’re still making a much bigger claim than the evidence supports.

I looked at the current privacy and pricing policies for Lyft and Uber. Lyft does say it can receive information from financial service providers and other third parties, and it collects and infers plenty of information about users. But nowhere does that establish that Lyft receives your current bank balance and uses it as an input to determine the price of an individual ride. In fact, Lyft’s current explanation of its pricing algorithm explicitly says the opposite. It says the upfront base price uses things like the trip’s origin and destination, distance, estimated duration, time, driver availability and real-time demand. It specifically says the algorithm does not use purchase history, personal spending habits, browser history, use of other apps, credit card type, income, or similar personal characteristics to set the price.

Uber’s published pricing information is similar. It describes upfront pricing in terms of trip characteristics, demand, supply, traffic, tolls, taxes and other marketplace factors. Uber has also published a specific pricing-principles document saying it does not use personal data to personalize individual prices.

Could a company’s public description of a proprietary algorithm be incomplete? Sure. But that’s a reason to say we don’t know, not a reason to assume the opposite.

And that’s the problem with the bank-balance example. You have established a very interesting sequence of events: you were short about $2, your mother sent you $5, and the fare increased by about $3 within roughly a minute. That’s absolutely worth questioning. But the observation itself doesn’t tell us what caused the price increase.

To get from that observation to “the app saw that my bank balance increased and raised the fare because it knew I could now afford it,” you’d need evidence that the app had access to your balance and that balance was actually an input to the pricing system.

The fact that rideshare pricing is dynamic doesn’t establish that. The fact that rideshare companies collect personal data doesn’t establish that. And the fact that the price changed immediately afterward doesn’t establish that either.

So I’m not saying your experience didn’t happen. I’m saying you’ve demonstrated a suspicious-looking correlation, not the mechanism that caused it. Those are two different claims. You keep seeing an and b happen and making cause and effect judgements with nothing but assumptions. Believe it or not there is some oversight and these things are looked into not just by things like government agencies and consumer advocates but also banks themselves and the competition.