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City Tells Ridesharing Services Lyft, Uber And Sidecar To Shut Down

Axel Hellman |
June 25, 2013 | 3:33 p.m. PDT

Staff Reporter

Lyft is an app that connect smartphone users with available drivers
Lyft is an app that connect smartphone users with available drivers
The App-based ridesharing services Lyft, Sidecar, and Uber were told yesterday by the Los Angeles Department of Transportation (LADOT) to shut down their operations in the city. This cease-and-desist letter was sent to each of the three companies, citing safety concerns.

This comes as a surprise to the companies, which were given the green light by the California Public Utilites Commission (CPUC) in January after they agreed to certain safety and insurance requirements.

LADOT has no legal grounds to shut down the ridesharing services, according to a spokesperson for Uber. He said that the cease-and-desist letter that his company received cited a city law that explicitly states that it does not apply when it is in conflict with state or national laws.

“In this case, it's the state PUC who has jurisdiction, and the PUC has explicitly given the authority for these drivers to operate,” the spokesperson said.

Taxi companies have attempted to portray mobile-based ridesharing services as systems with unsafe cars and unverified drivers. A representative for taxi firms told LA Weekly, “Drivers for Uber, Lyft, and Sidecar are not required to pass background checks or have their vehicles inspected for safety.”

This is not true. Lyft requires that drivers use cars from model year 2000 or newer and they must pass Lyft’s safety inspections. Lyft also takes out a million-dollar insurance policy for its drivers and performs background checks on all drivers. 

Lyft’s requirements for its drivers are similarly stringent compared to those that govern standard Los Angeles taxicabs, although with there are some differences. Lyft requires that its drivers be at least 23 years old, whereas a taxi driver can be as young as 18. They both perform background checks for drug offences, DUIs, sex offender status, and violent crime or theft.

The Los Angeles Board of Taxicab Commissioners does not allow new taxi drivers to have any major violations such as hit-and-runs or reckless driving, but Lyft requires that drivers’ records be clean of such violations for only the past three years.

The biggest difference in their requirements for drivers is that taxi drivers must have a commercial license, while Lyft drivers do not need a special license of any kind. 

Uber is a mobile app service that carries passengers in black town cars and SUVs and also provides rides in drivers’ personal cars, in a service similar to Lyft and Sidecar called UberX. UberX requires drivers to be 23 or older, demands their social security numbers for background checks, going back seven years in their criminal record, and scrutinizes their driving record for the past ten years.

A spokesman said that Sidecar also has similar background check, vehicle quality, and insurance policies. The spokesman also affirmed, "We are not a livery or taxi service, but a ridesharing app that matches drivers with riders going in the same direction."

One of the legal questions brought up by these recent events is whether services such as Uber, Lyft and Sidecar should be regulated as taxi services, as livery services, or in the case of Sidecar and Lyft, as private citizens who give rides to strangers.

Lyft slyly presents itself as a system where drivers give passengers rides for free and passengers are free to give their driver an optional donation, instead of a system where passengers directly give drivers money in exchange for a ride, just as they would in a taxi. But in practice, it often feels like the latter.

On Tuesday, Lyft put out a statement clarifying that they should not be regulated like a taxi service, “Lyft’s hundreds of thousands of community members are changing the way people get around, and making city life more affordable, friendly and efficient. As with innovations and movements before us, there will often be challenges and hurdles along the way. Yesterday’s cease and desist letter from a taxi regulator within the Los Angeles Department of Transportation (LADOT) is similar to what we received when we first launched in San Francisco one year ago. Since that time, we have signed an operating agreement with the California Public Utilities Commission (CPUC), which allows us to operate legally throughout California. The CPUC operating agreement clarifies that we are not a taxi and demonstrates that this is a state issue.” 

The statement repeated Uber’s position that the state, not the city, has jurisdiction. It also emphasized previous regulatory hurdles that Lyft overcame.

This April, ridesharing companies including Lyft and Sidecar received cease-and-desist letters from San Francisco International Airport (SFO) that accused them of operating an illegal, unapproved service on airport property.

These regulatory battles over whether ridesharing services should be regulated as taxis, as limousines, as private cars, or as something else are a sign that, unless regulators and taxi companies squash them first, we may be seeing the rise of an entirely information-driven new form of transportation.


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