Geographic Price Arbitrage

A caller discovered and exploited a geographic arbitrage opportunity in Uber's referral credit system by taking advantage of price differences between India and the US.

Key Points:

• Core Mechanism:

  • Uber offered a referral system where you give credits and get credits back
  • System didn't account for geographic price differences
  • Rides in India cost significantly less than US rides

• Execution:

  • Got people in India to sign up for Uber
  • Gave them $10 credits (significant amount in India)
  • They would take cheap rides in India
  • Received $10 credits in return
  • Sold credits to Americans at heavy discount
    • Example: $1,000 worth of credits sold for $5

• Economics:

  • Generated approximately $15,000 monthly
  • Amount exceeded typical income of entire village in rural India
  • Operated for multiple years
  • Kept living costs low to save money, knowing loophole would eventually close

• Business Model Sustainability:

  • Temporary opportunity until Uber fixed the geographic loophole
  • Operator maintained low overhead knowing it wasn't permanent