In June, Lyft announced a new cancellation policy for drivers. For some, it’s been a benefit, but for others, it’s just another rate cut disguised. Senior RSG contributor Paula Gibbins breaks down what drivers can expect with this new cancellation fee change.
Beginning on June 15, a new cancellation policy went into effect for drivers on the Lyft platform. Drivers were used to the old system where you get a flat $5 cancellation fee if the passenger decides to cancel the ride. That $5 fee went directly to drivers without Lyft taking anything out of it for themselves.
Now, cancellation fee is based on the time and distance driven toward the pickup before the cancellation was made. The minimum cancellation fee drivers will receive is $2; the maximum fee $15.
We first broke this news on our YouTube channel here: New Nationwide Lyft Cancellation Policy for Drivers! You can take a look at the video below:
Lyft’s New Cancellation Fee
The rate is based on your current market rate card. For instance, in Minneapolis, I would receive $0.63 for every mile and $0.19 for every minute I drove toward the passenger before they canceled. If that total is under $2, I would receive the $2 minimum fee.
My rate card also shows the cancel minimum and maximum as described earlier.
This change would also mean that Lyft is getting a cut. The rider is still charged $5 for canceling, and there are several instances where the driver would not get the full $5 fee paid to them since it’s based on distance and time.
Lyft’s Cancellation Fee in Action
Let’s look at a few examples:
If I drove 5 miles and it took me 7 minutes to get to the passenger, and they canceled as I arrived, here’s how the new policy would look for me:
5 miles x 0.6375 + 7 min x 0.195 = $4.55
A lot of drivers don’t take rides that are further than a mile or two from their current position, so let’s change this slightly to accommodate that:
1 mile x 0.6375 + 3 min x 0.195 = $1.22 → $2 minimum
That’s a far cry from the $5 cancellation fees that drivers are used to. One driver who reached out to us said that she received “a measly $2.41 for driving to a pick up and having them cancel several minutes after arriving.”
Because of this change, this driver who wants to remain nameless said, “I was so disappointed that I have not driven since. What’s next, driving for free? That’s what it feels like.”
Lyft outlines their policy in detail on their website, but the gist of it is that you can receive a cancellation fee if the passenger cancelation window has passed after you accepted the ride, you’re making progress toward the passenger’s pickup location and are on track to arrive on time.
They also show that if a passenger is a no-show, you’ll receive a fee if you follow the procedure of arriving at the location, tapping that you’ve arrived and waiting the required 5 minutes, all while trying to contact the passenger or responding to them if they contact you before cancelling as a no-show.
What are Drivers Saying?
Some drivers are for it and others are very against it.
One commenter on Joe’s video said, “Simplify it…hahahaha. Simple was $5 or $10. It’s the same as them going back to old pricing structures in markets because they were losing money on long pickups and short rides, which became normal during the pandemic. They are hurting for money and cutting corners by complicating it saying the opposite.”
Another responded, “They think we’re so dumb.”
One individual made a good point when they stated “It would be a fair policy and make more sense only if they charged the rider accordingly.”
If the rider is the one who cancels, they should pay the full fee, whatever that may be; whether it’s $2 or $15 or somewhere in-between.
Another person, who may be in a market that’s more profitable, said, “I didn’t know of this change until this morning when I was driving almost 10 miles to pick up a rider and they literally canceled the ride when I was 4 blocks away. I was pissed they waited so long to cancel. Then I saw I was paid $14.34 for the cancelation and then I cooled down. I actually like this new policy, especially right now. Pick up are a lot longer than they were pre-covid.”
It seems drivers who typically take longer pickups are reaping more rewards if there are cancelations involved, but the downside is that Lyft doesn’t pay for long pickups like Uber does. So, if the passenger doesn’t cancel, the driver just drove 20 miles and saw nothing for it.
Can Drivers “Cheat the System”?
Drivers can cheat the system… somewhat. As I mentioned earlier, if a driver is sent a long way for a pick up and the passenger cancels, they get a decent fee.
If you go a short or long distance and wait the necessary five minutes before you cancel on the passenger and have tried contacting them, you’ll get the fee, whatever it might be.
It’s up to each driver to determine what is worthwhile or not. We don’t really have control over when/if a passenger cancels on us.
We’ve all had that longer pickup where we’re a block or two away and the ride is gone. Now, at least you’ll be compensated for the time and distance traveled if that does happen.
You could try to “cheat the system” by refusing all close rides and hoping for a canceled ride to get a bigger cancellation fee. However, you’ll be taking a big risk. How often do you get canceled rides? Is it worth it to try to get around the policy?
A flat rate was nice. It was tangible. You knew what you were getting and you knew you were earning the entirety of the fee since you were the one being inconvenienced.
However, I do get it. The change is a way for Lyft to make more money (which is what all businesses strive for in one way or another) and it’s also tangible. You can see what you’re earning specifically based on how far and long you’ve traveled to get to the passenger who then canceled on you.
It may not pay out for you every time, but it might get you more than the $5 you’re used to. It’s not a heinous enough crime, in my opinion, to avoid driving for Lyft. But that’s just me.
What do you think about Lyft’s changes to their cancellation fee? Have these changes benefit or hurt you?
-Paula @ RSG