Rideshare Battle Shifts to L.A.: City Tells Uber, Lyft, SideCar to Stop Picking Up Riders

  • Share
  • Read Later

Sharing may seem harmless—a helpful, good thing for society, even. But for months, “sharing economy” businesses like Airbnb, FlightCar, and Lyft have come under legal fire in cities such as San Francisco, New York, and Austin. This week, ridesharing companies, which match nonprofessional drivers up with paying passengers, received cease-and-desist orders from Los Angeles authorities.

Cease-and-desist orders went out to Uber, Lyft, and SideCar on Monday. A letter addressed to SideCar CEO Sunil Paul from Thomas M. Drischler, the Los Angeles Department of Transportation’s taxicab administrator, states, “Due to the fact that your company has no permits or license to transport passengers for hire, in the interest of public safety, Sidecar, including all of its agents and contractors, is hereby directed to cease and desist from picking up passengers within the City of Los Angeles,” according to Southern California Public Radio.

The CEOs of Uber and Lyft received similar letters. If drivers operating in coordination with these upstart ridesharing services don’t comply, they could be arrested and have their cars impounded for up to 30 days, the letters warn.

The Los Angeles Times editorial board bashed the transportation department’s move, stating that the city’s taxi regulator “doesn’t have the authority” to tell the upstart sharing economy companies to stop picking up passengers. “Uber, Sidecar and Lyft may be disrupting the cab business, but they’re not operating cab companies,” the editorial reads.

(MORE: The Other Complication for Airbnb and the Sharing Economy: Taxes)

SideCar’s Paul has made essentially the same argument in the past. “SideCar is not a taxi company,” Paul wrote earlier this year, when SideCar drivers were threatened with having their cars impounded in Philadelphia and Austin. “SideCar is a smartphone app that instantly matches people for peer-to-peer ridesharing. SideCar drivers are regular, everyday people willing to give rides to people who need them. People pay what they want and drivers choose when they drive, how often they drive and where they go.”

Officials cracking down on ridesharing operations claim that they’re doing so due to safety concerns. “These companies have no permits, and that’s a real concern to us,” Drischler said, according to the LA Times. “That raises safety issues.”

Others see the crackdowns on ridesharing mainly as a means to defend the turf of traditional taxi companies, which provide cities with a steady flow of tax dollars and fees for licenses and permits. On Tuesday, 200 taxi drivers circled Los Angeles City Hall and honked horns to protest ridesharing operators and implore officials to regulate or shut them down, the Associated Press reported. “We feel like they come and steal our fares through these apps,” one cab driver told a local TV station.

Sharing economy operations aren’t necessarily opposed to all regulation. But because their business models are so new and different they think it’s unfair to lump them in with traditional companies and treat, for example, someone who occasionally rents out an extra room via Airbnb the same as a hotel.

(MORE: Kid Rock’s $20 Concerts: Good for Fans, Bad for Scalpers)

Arun Sundararajan, a professor at New York University’s Stern School of Business who studies the sharing economy, tends to side with the Airbnbs and Sidecars of the world. “These are new models, and they don’t fit into the old boxes,” Sundararajan told me recently. “You can’t force a business to admit it’s a taxi company when it’s not.”

Sidecar, Lyft, and Uber have all stated that they’ll keep operating in Los Angeles. Perhaps it was just coincidence, but Sidecar seemed to thumb its nose at Los Angeles by putting the spotlight on one of its L.A. drivers on the company’s blog on Tuesday — the day after the city issued the cease-and-desist letters.

11 comments
john.diatalevi
john.diatalevi

What they failed to mention is, your personal auto insurance policy will not cover you in the event of an accident while you’re transporting someone in exchange for money, even if it’s called a donation.  Some of these companies offer excess liability insurance. Excess kicks in after your policy is exhausted, however, if your policy does not cover the loss, the excess policy will not either.  

If you’re considering making a little extra money by joining one of these services, your first call should be to your insurance agent. Make sure you have the right kind of insurance BEFORE you start. Be upfront with your agent. Tell him you’re planning on transporting people for a fee, and want to make sure your covered should something happen.

Changing the name of the compensation does not change what it really is. It’s kind of like putting a carrying handle on a piano and saying now you have a portable piano. 

piranha0908
piranha0908

Unions are the reasons for the backlash.  California and Washington are Union states.  It is not a right to work in either state however Washington is welcoming the companies where as California a pro union state is opposing the idea.  Texas and Philli have reasons to deny the service but here in California a taxi ride which would cost 20.00 to go to your location costs up to 50-60 because of the tax and cost for the driver to drive at an hourly rate of 15-25 an hour.  I have been drove the long way and felt robbed but because they use a meter you have to pay what is on the meter even if it's not fair.  At least sidecar, lyft, and uber are making it possible for you to rate the driver and pay for the ride based on what is acceptable.  I will never use a Taxi again.

HayleyMadigan
HayleyMadigan

Have you ever gotten into a cab in LA? The drivers are surly, unsafe and love to use their brakes, hard. The experiences with Uber has been the polar opposite. This is just another case of mafia mentality seeping into our society. Typical for politicians to side with guys lining their pockets. 

lovelyft
lovelyft

If public safety is really the main concern of Mr. Drischler and other regulators, then they should be embracing Lyft and other ride sharing groups with open arms.  To my knowledge there has not been a single safety issue since ride sharing apps have become popular.  Lyft screens drivers more thoroughly than taxi companies via criminal background checks and more in depth DMV checks.   The feedback rating system ensures that only the top rated drivers continue to be part of the Lyft community.  The culture of Lyft is to be friendly, safe and helpful - who hasn't driven around town and been cut off by a yellow cab or had white knuckles while riding in one?  If anything, Lyft should be used as a model on which to base safety regulations for new ride sharing companies rather than depriving the public of a very safe, efficient, friendly, affordable means of transportation.

ElizabethOlmedo
ElizabethOlmedo

Regardless of what one thinks of groups like Uber, Lyft, and Sidecars, you've got to love being told what you can and can't do with your personal possessions. In the end it all boils down to control and taxes. The government can squeeze an cab driver for his/her hard earned money, but not an individual who decides to share his/her vehicle for a little extra cash.

PeterAKirby
PeterAKirby

Do we have the rule of corporations?  Or do we have the rule of law?  Just because Uber, Lyft and SideCar have public relations machines spouting a bunch of high tech propaganda about social justice, that doesn't change the fact that these are simply corporations out to make a buck.  They are as sanctimonious as Bonnie and Clyde.  If somebody made a smart phone application that made it easy to rob banks, would that mean that it is suddenly ok to rob banks?  Of course it wouldn't.  Uber, Lyft and SideCar are all establishment con job operations looking to knock over a legitimate industry.

Laughtiger
Laughtiger

Thing is, they really are, essentially, taxi companies.  The drivers are independent contractors, just like most taxi drivers; drivers get to choose or bid for their own fares from the dispatch system, just like taxi drivers; drivers are working for income, just like taxi drivers (and unlike real ridesharing services like Avego). If you make a list of every single difference between taxis and ridesharing, Lyft and sidecar fall on the taxi side.


As for the "sharing economy" none of these companies are really part of the sharing economy at all.  What they do is better called "share-washing":


http://www.opednews.com/articles/Sharewashing-is-the-New-Gr-by-Anthony-Kalamar-130513-834.html

BrettRothenberg
BrettRothenberg

"SideCar’s Paul has made essentially the same argument in the past. “SideCar is not a taxi company,” Paul wrote earlier this year, when SideCar drivers were threatened with having their cars impounded in Philadelphia and Austin. “SideCar is a smartphone app that instantly matches people for peer-to-peer ridesharing. SideCar drivers are regular, everyday people willing to give rides to people who need them. People pay what they want and drivers choose when they drive, how often they drive and where they go.” - If you are educated on the issue you will see this rigth here is the grey area.. technically the issue would be with the 1099'd drivers.. not the apps.. going after the apps is legally not going to happen since its the drivers in violation.. and the companies put all the legal on the driver and separate themselves. The companies contracts are "lead generators".. its the affiliates/drivers who are in violation.. the companies are putting the insurance and permits onto the drivers in their TOS.. the funny thing is there is no personal insurance that covers ride sharing . there is no vehicle warranty under personal use.. so they are making the drivers get insurance (citizen taxi insurance as I call it), which simply doesn't exist in todays world.. there is no hybrid insurance.. the excess liability polices still leave all lyft/uberx/sidecar drivers responsible for collision/comprehensive damange and could still end up paying bills the rest of their life from one accicent. Lyft/uberx/sidecar also need to come up with some long term vehicle inspection guidelines.. they check the car on interview and never see it again.. and some drivers are putting 4-5k/mi a month on their "bandcabs"..

ampersandroo
ampersandroo

@MikeKonowitz many cities, like DC, have a plethora of small cab companies and independent drivers. Taxi markets vary locally, but they generally aren't big business. Meanwhile, we have taxi inspections and licensing so you aren't riding in a dangerous car with a driver who may get you lost, drive recklessly, or abduct you. That there are some dangerous cabs and drivers out there just illustrates that we need strong regulation of vehicles for hire. The last thing to do should be letting just anyone sell you a ride.