BUSINESS

Uber's New Year's Eve Surge Pricing Could Be Steep For Users

12/31/2014 05:25 EST | Updated 12/31/2014 05:59 EST

Uber is warning customers that its controversial surge-pricing system will be in effect on New Year’s Eve, which the company expects to be its busiest night ever.

The car-service company expects the highest demand between 12:30 and 2:30 a.m., which will drive fares up via Uber's pricing model.

“To avoid these high fares, don't request during these two hours — catch a ride right when the ball drops at midnight or wait a couple hours for prices to return to normal,” says an Uber email sent to customers on New Year’s Eve. It also recommends splitting a fare with friends to make the surge in prices more affordable.

The company explains that with more than two million Uber rides expected globally on New Year’s Eve alone, surge pricing is required “to get enough cars on the road and ensure you always have a reliable ride.”

Riders can expect to pay five times what they regularly would during surge-pricing, or more. The company has been accused of profiteering for their business model which sees customers pay more — often sharply more — during times of high demand.

The company says its algorithm balances supply and demand at a price that will attract drivers to offer their services but won't alienate customers. When there are enough drivers on the road to satisfy demand, the company says, prices go back down.

Uber's expected New Year's Eve surge-pricing, in a chart sent to Uber customers

Uber was accused of price-gouging after surge-pricing during the Sydney hostage crisis, when the company initially charged customers four times the usual amount to flee the city centre. Uber quickly ended its surge-pricing and offered people free rides out of the city centre instead.

In the wake of Hurricane Sandy, the company was spurred to adopt a national policy for its U.S. operations which bans surge-pricing during natural disasters and emergencies.

Its latest email to customers also explains that users will always be notified in advance and asked to confirm increased rates. The company uses a smartphone app to connect passengers with drivers, some of whom do not have a taxi licence.

The City of Toronto filed a lawsuit against the company in November claiming the service jeopardizes public safety and taxi companies have complained the unlicensed drivers are unfairly taking away their business.

Did you take Uber on New Year's Eve? Post a picture of your bill or tell us how much you paid in the comments below.

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