Every week we will break down, debunk and demystify your rights as a shopper in Australia. This week we are looking at whether it’s legal for companies to implement “surge pricing” during high demand.
We all know life is getting more expensive than ever before, and how important it is to stretch every dollar you make.
That’s why each week we’ll answer a question surrounding what shoppers are – and aren’t – entitled to when dealing with retailers and manufacturers.
It feels wrong!
We were discussing this in the wake of a lot of businesses starting to have their Christmas parties.
Every time on a Friday or a Saturday night if you order a lift home on a rideshare app you get hit with the most ridiculous high prices because of surge pricing.
Then sometimes you go to get in a taxi and they won’t even turn the meter on. It’s a rip off!
During the worst of COVID-19 the government stepped in to stop shops charging too much for rapid tests.
So how is surge pricing not illegal for people wanting to go home?
The bottom line is, unfortunately, that surge or “dynamic” pricing is not illegal.
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There is a condition though – businesses must make it absolutely clear what the total price will be upfront.
You can’t sell a consumer on the premise of one price and then hand them the bill for another when you arrive at their destination.
After all, in a free market the easiest time to increase prices is when the demand is high, such as pub goers all leaving at the same time when the house lights are turned on.
But here’s where things get murky.
Under Australian Consumer Law, businesses are not allowed to make false or misleading claims about their prices, including the reasons for surge pricing.
In theory, this means businesses must be able to prove there is high demand in order to implement surge pricing.
Some consumers label the practice of ramping up prices during high demand as “price gouging”.
While arguably unethical, on their own very large price increases are not illegal.
As for getting home, I don’t have any concrete solutions for you – download as many of the apps as you can and price match them all against each other. Competition is usually the strongest way to bring down prices.
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