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Uber Ends Price Gouging During Severe Weather, Natural Disasters

As Uber, the trendy shuttle service, grows across the United States, the company was put under constraints after gouging wallets of those needing a ride home in severe weather.

Uber is a shuttle service company that is known for its mobile application feasibility. Users can simply tap their phone a few times and schedule a "taxi" ride in select major cities. Being a private company, rates are not tied down to government regulations. Uber hiked prices in New York City during Superstorm Sandy in the fall of 2012 and other severe storms and weather incidents.

Known as surge pricing, the company faced heat as some riders reported cab fares nearly eight times the normal rate. Uber was also known to boost fares during major holidays when traffic levels are high.

However, the New York state government has stepped in and put an end to the fluctuating fare levels. Attorney General Eric T. Schneiderman announced on July 8, 2014, that in agreement with Uber, fare prices would be capped during "abnormal disruptions of the market" such as natural disasters or intense storms.

Uber, in turn, applied the regulations to all locations in the United States. In a press release, Uber said it will cap the price flux limited to the normal range of prices it charged in the preceding 60 days.

Attorney General Schneiderman said the policy "provides Uber with clarity from government about how the law will be applied to its innovative pricing model."

On the same day, Uber announced a partnership with American Red Cross in an effort to aid relief efforts during natural disasters.

During periods of elevated price levels, Uber will donate 20 percent of the total fare to the Red Cross. In addition, Uber will provide transportation for Red Cross workers.