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Alderman accuses Uber, Lyft of ‘predatory fares,’ wants price cap imposed

Ride-hailing firms would have to notify the city of regular fare rates. They would be free to use “surge pricing” when demand is high, but capped at 150% of the regular fare. So a normal fare of $10 could increase to no more than $15.

Uber and Lyft are two ride-hailing companies that operate in Chicago.
A cap on fees charged by Uber, Lyft and other ride-hailing companies would limit surge pricing. Even during snowstorms or other times of high demand, drivers could charge no more than 150% of their “current regular fare,” under a proposal by Ald. Brendan Reilly.
Associated Press

Downtown Ald. Brendan Reilly (42nd) is proposing a cap on ride-hailing fees to rein in what he called “predatory” charges routinely imposed by Uber and Lyft.

At Wednesday’s City Council meeting, Reilly plans to introduce an ordinance requiring companies licensed as “transportation network providers” to charge no more than 150% of their “current regular fare,” even during snowstorms and other periods of high-demand.

The ordinance would require Uber, Lyft and Via to notify Business Affairs and Consumer Protection Commissioner Rosa Escareno of “each regular fare rate used” by the company for each class of vehicle and type of service. That includes both “black cars” and sedans, shared rides and solo trips.

Ride-hailing companies would be free to continue “surge pricing” when demand is high — but within limits. If the normal fare is $10, the companies could charge no more than $15.

Each fare charged over the cap would trigger a $100 fine. Violations on three separate days within any 12-month period could result in a “suspension, recision, non-renewal or revocation” of the company’s ride-hailing license.

The three-strikes-and-you’re-out provision would not be determined by the amount of the fares charged.

Ever since the ride-hailing phenomenon that decimated the taxicab industry, there have been complaints that Uber and Lyft were gouging customers during periods of peak demand.

Those complaints were silenced during the stay-at-home shutdown triggered by the coronavirus. They have picked up steam as more and more people get vaccinated and start returning to work and venturing out to restaurants and bars.

“Every day, I receive complaints about the exorbitant costs being charged by Uber and Lyft for relatively short trips that used to only cost passengers a few dollars. I hear from young women in the service industry who work late hours who can no longer afford a safe car trip home from work late at night and are forced to risk their personal safety using the CTA system,” Reilly wrote in an email to the Sun-Times.

“I am receiving reports of rideshare passengers paying a small fortune for short trips. Trips that were normally priced at $15 are now being charged at `surge prices’ around $40. That surge pricing isn’t just exorbitant. It is straight-up predatory.”

Neither Uber nor Lyft have responded to requests to comment.

Two years ago, Mayor Lori Lightfoot imposed a $40 million congestion fee on ride-hailing companies. At the time, Lightfoot accused Uber, whose investors include former Mayor Rahm Emanuel’s brother, of “paying off” black ministers with an offer of $54 million to kill her $40 million congestion fee.

The ride-sharing fee was the most controversial element of Lightfoot’s first budget and not simply because of the back-and-forth between the mayor and Uber.

It more than tripled the tax on passengers riding solo to and from downtown and slapped a 74% increase on ride-hailing trips in Chicago neighborhoods that go nowhere near downtown.

On Monday, Reilly harkened back to the advent of the ride-hailing phenomenon.

At the time, Uber and Lyft and their easy-access apps were welcomed by riders “eager for the taxicab fleet monopolies to face competition” to force them to improve service, the alderman said.

At Emanuel’s behest, the City Council allowed the ride-hailing industry to “operate under less restrictive rules” than cabs — without first obtaining livery licenses from the city, Reilly said. That allowed thousands of ride-hailing drivers to “flood the market.”

The competition worked — for a while. Reliability and service improved. Cabbies were “feeling the pressure from their rideshare competitors.”

But, over time, Reilly said Chicago paid a price for, what he called “imbalanced regulation of the taxicab industry and the lax regulation of the rideshare industry.” Cabs “started disappearing from the road.”

“Then, the pandemic hit. With central business districts across the country closed for business and millions of commuters working from home, the taxicab industry totally collapsed,” Reilly wrote.

“Today, incumbent monopoly ride share companies have vanquished and replaced their predecessors in the monopoly cab industry. Once again, consumers have fewer options. The lack of city regulation over rideshare fares, combined with a lack of competition, has empowered companies like Uber and Lyft to dramatically increase their prices.”