5 ms·

Ridesharing startups hit with cease-and-desist by California regulator

42 points by jetcom 14y ago

taw9 14y ago
I hope they fight this in court.
muzz 14y ago
Would this apply to Zimride, Riderbee, Ridejoy, etc. ?
- anigbrowl 14y ago
  Tough to say. For Ridejoy in particular, regulation could be a challenge, because it will be argued that by matching drivers with underused vehicles, there's an implicit promise that the vehicles are roadworthy and so on. Sure, you can invite users of the service to waive some of their rights or voluntarily accept a degree of risk and uncertainty to use the service, but courts sometimes view such arrangements as contracts of adhesion - tilted in favor of the offeror by virtue of the fact that a large organization has substantially more bargaining power than an individual, who is left with little choice but to accept or reject terms rather than negotiate them. I don't have a strong opinion on how this should turn out and am not an attorney. Rules that limit industry like this are sometimes the result of regulatory capture, but are equally often the result of consumer pressure following malfeasance by unscrupulous service providers some time in the past. Certainly such rules represent an increase in red tape, but that doesn't mean they're inherently bad; one might argue that they're an unavoidable corollary of a complex technological society, reflective of the challenges faced by its members - just as product liability rules are reflective of industrialization's severance of the traditional relationship consumer and producer that used to exist at the local level (blacksmiths, carpenters, et al.). Incidentally, I hope people won't interpret the CPUC's representatives mention of enforcement mechanisms as a threat. Spokespersons for public bodies like this are duty-bound to cite the way the law actually operates, rather than make policy statements about how it should operate. So discussion of enforcement mechanisms is no more than a restatement of fact in response to journalistic inquiry.
- johnrob 14y ago
  Possibly Riderbee, since IIRC they are similar to sidecar and lyft. Zimride and Ridejoy operate like a traditional bulletin board so they should be fine. When you're dispatching drivers in real time, just like a taxi dispatcher, the law can interpret you as one. The passenger is entrusting the service to assure the driver is safe. That's not a responsibility that the government wants to bestow upon a non-registered entity.
- ridejoy 14y ago
  We let drivers offer rides to places they're already heading to, and we cap pricing at the IRS reimbursement rate of about 50c/mile. This is very different from services like Sidecar and Lyft that compete with taxis, which in SF are around $3/mile and hire drivers to pick up passengers. We didn't receive a C&D from CA, and I doubt we will :)
rootedbox 14y ago
I can agree with side.cr, and lyft.. That they are simply a platform by which drivers, and those wanting to be driven are able to reach other. However... Even though payment is voluntary the drivers are participating in a transportation service, and are subject to being regulated as one; non-profit or not. Not a perfect example of this but similar is that craigslist might be a communication tool for those dealing in prostitution, but they are not the ones committing the crime.
- johnrob 14y ago
  The problem is that "communication platforms" don't normally run background checks, process payments, or offer insurance policies. Ironically, getting rid of these things - which serve to make the service safer - probably would make them more legally sound.
nc17 14y ago
If I were the rental car lobby, I would be putting pressure on regulators to make things as hard as possible for these companies. They are startups, so it's hard for them to put up much of a fight. It would be very different if Google was behind ride sharing. It took someone the size of Apple to work with the music industry to sell mainstream music legally to the masses.
- aaronblohowiak 14y ago
  >It took someone the size of Apple to work with the music industry to sell mainstream music legally to the masses. This is historically inaccurate; Apple was merely the first to do so at such scale. UMG/Sony/WMG all had the 99cents/10dollar albums by 2000, the iTMS wasn't available until 2003. http://en.wikipedia.org/wiki/Online_music_store#History http://en.wikipedia.org/wiki/Online_music_store#History http://en.wikipedia.org/wiki/ITunes_version_history http://en.wikipedia.org/wiki/ITunes_version_history
jakejake 14y ago
I think the idea of ride sharing is pretty cool. But to be fair when I read about some of the ride services, they kinda are just unregulated taxi services. If somebody's heading to the airport and I get to hitch a ride with them - that's a ride share. Having drivers waiting for ride requests and then taking them wherever they want to go - call me crazy but that doesn't seem like ride sharing to me.
TinyBig 14y ago
I wonder if some of these startups knowingly run afoul of the law, thinking that if they build sufficient ridership it will give them the sway to have the laws changed.
rprasad 14y ago
I know people in the echo chamber don't like to hear this, but ridesharing is not an innovation. Los Angeles and Chicago have had ridesharing programs for at least a decade. Hell, even Cleveland had a ridesharing program years before Uber or Lyft were founded (and that was how I got around Cleveland in law school). Uber and Lyft call themselves "ridesharing" programs where passengers "donate" money to a driver who "just happens" to be going to the same destination as his passengers but who will not remain at that destination and who will probably pick up more passengers shortly thereafter and "coincidentally" drive them to their desired location in exchange for a "donation." Uber and Lyft can use all the euphemisms they want, but they what they are is the very definition of a for-hire car service. The fact that they straddle the line between two types of regulated car services (cabs and limos/"charter car") does not change the essence of the commercial transaction that takes place. The fact that a mobile app or website is used to arrange the transaction instead of a phone call does not change the essence of the commercial transaction that takes place. Regulations on cars-for-hire exist for a reason: to protect the safety of passengers by ensuring a minimal level of competence and to ensure recompense via adequate capital or insurance in the event of an accident. These regulations work remarkably well, which is why so many people think they are unnecessary.
- te_platt 14y ago
  The regulation to ensure a minimal level of competence is a driver's license and the regulation to ensure recompense is (as you mention) insurance. Both of which are required of every driver whether a taxi or not. The regulations on taxis exist to protect taxi owners. And yes it is clear that Uber and Lyft are taxi services.
  - johnrob 14y ago
    Uber is in an entirely different legal category. All of their drivers are registered. Their main issue is essentially a turf war between limos and taxis. Lyft and sidecar are being accused of enabling unregistered professional transportation.
- Game_Ender 14y ago
  Did you read the article? Uber is definitely not being served hear, and they don't call themselves a ride sharing services. Besides that, I agree with your point about these services really being car's for hire, but calling themselves ride sharing services.
dsl 14y ago
Prostitutes attempt to skirt the law in the same way by accepting "donations" for time instead of payment for services. You know how well that works for them.
- citricsquid 14y ago
  I thought prostitution laws were avoided by escorting, providing time with another adult (which totally won't have sex involved!) for a fee? or is that to avoid different laws?
- tsotha 14y ago
  Heh heh. If they're donations then it's just like church - you don't have to pay if you don't want to. On the other hand the usher doesn't beat the crap out of you if you don't.
tsotha 14y ago
I agree with the state in that these companies fall under the law as written. The real question is whether the law is really designed to benefit the public or whether it's a rent-seeking arrangement with the taxi companies.

42 points by jetcom 14y ago

taw9 14y ago

I hope they fight this in court.

muzz 14y ago

Would this apply to Zimride, Riderbee, Ridejoy, etc. ?

anigbrowl 14y ago
Tough to say. For Ridejoy in particular, regulation could be a challenge, because it will be argued that by matching drivers with underused vehicles, there's an implicit promise that the vehicles are roadworthy and so on. Sure, you can invite users of the service to waive some of their rights or voluntarily accept a degree of risk and uncertainty to use the service, but courts sometimes view such arrangements as contracts of adhesion - tilted in favor of the offeror by virtue of the fact that a large organization has substantially more bargaining power than an individual, who is left with little choice but to accept or reject terms rather than negotiate them. I don't have a strong opinion on how this should turn out and am not an attorney. Rules that limit industry like this are sometimes the result of regulatory capture, but are equally often the result of consumer pressure following malfeasance by unscrupulous service providers some time in the past. Certainly such rules represent an increase in red tape, but that doesn't mean they're inherently bad; one might argue that they're an unavoidable corollary of a complex technological society, reflective of the challenges faced by its members - just as product liability rules are reflective of industrialization's severance of the traditional relationship consumer and producer that used to exist at the local level (blacksmiths, carpenters, et al.). Incidentally, I hope people won't interpret the CPUC's representatives mention of enforcement mechanisms as a threat. Spokespersons for public bodies like this are duty-bound to cite the way the law actually operates, rather than make policy statements about how it should operate. So discussion of enforcement mechanisms is no more than a restatement of fact in response to journalistic inquiry.
johnrob 14y ago
Possibly Riderbee, since IIRC they are similar to sidecar and lyft. Zimride and Ridejoy operate like a traditional bulletin board so they should be fine. When you're dispatching drivers in real time, just like a taxi dispatcher, the law can interpret you as one. The passenger is entrusting the service to assure the driver is safe. That's not a responsibility that the government wants to bestow upon a non-registered entity.
ridejoy 14y ago
We let drivers offer rides to places they're already heading to, and we cap pricing at the IRS reimbursement rate of about 50c/mile. This is very different from services like Sidecar and Lyft that compete with taxis, which in SF are around $3/mile and hire drivers to pick up passengers. We didn't receive a C&D from CA, and I doubt we will :)

rootedbox 14y ago

I can agree with side.cr, and lyft.. That they are simply a platform by which drivers, and those wanting to be driven are able to reach other. However... Even though payment is voluntary the drivers are participating in a transportation service, and are subject to being regulated as one; non-profit or not. Not a perfect example of this but similar is that craigslist might be a communication tool for those dealing in prostitution, but they are not the ones committing the crime.

johnrob 14y ago
The problem is that "communication platforms" don't normally run background checks, process payments, or offer insurance policies. Ironically, getting rid of these things - which serve to make the service safer - probably would make them more legally sound.

nc17 14y ago

If I were the rental car lobby, I would be putting pressure on regulators to make things as hard as possible for these companies. They are startups, so it's hard for them to put up much of a fight. It would be very different if Google was behind ride sharing. It took someone the size of Apple to work with the music industry to sell mainstream music legally to the masses.

aaronblohowiak 14y ago
>It took someone the size of Apple to work with the music industry to sell mainstream music legally to the masses. This is historically inaccurate; Apple was merely the first to do so at such scale. UMG/Sony/WMG all had the 99cents/10dollar albums by 2000, the iTMS wasn't available until 2003. http://en.wikipedia.org/wiki/Online_music_store#History http://en.wikipedia.org/wiki/Online_music_store#History http://en.wikipedia.org/wiki/ITunes_version_history http://en.wikipedia.org/wiki/ITunes_version_history

jakejake 14y ago

I think the idea of ride sharing is pretty cool. But to be fair when I read about some of the ride services, they kinda are just unregulated taxi services. If somebody's heading to the airport and I get to hitch a ride with them - that's a ride share. Having drivers waiting for ride requests and then taking them wherever they want to go - call me crazy but that doesn't seem like ride sharing to me.

TinyBig 14y ago

I wonder if some of these startups knowingly run afoul of the law, thinking that if they build sufficient ridership it will give them the sway to have the laws changed.

rprasad 14y ago

I know people in the echo chamber don't like to hear this, but ridesharing is not an innovation. Los Angeles and Chicago have had ridesharing programs for at least a decade. Hell, even Cleveland had a ridesharing program years before Uber or Lyft were founded (and that was how I got around Cleveland in law school). Uber and Lyft call themselves "ridesharing" programs where passengers "donate" money to a driver who "just happens" to be going to the same destination as his passengers but who will not remain at that destination and who will probably pick up more passengers shortly thereafter and "coincidentally" drive them to their desired location in exchange for a "donation." Uber and Lyft can use all the euphemisms they want, but they what they are is the very definition of a for-hire car service. The fact that they straddle the line between two types of regulated car services (cabs and limos/"charter car") does not change the essence of the commercial transaction that takes place. The fact that a mobile app or website is used to arrange the transaction instead of a phone call does not change the essence of the commercial transaction that takes place. Regulations on cars-for-hire exist for a reason: to protect the safety of passengers by ensuring a minimal level of competence and to ensure recompense via adequate capital or insurance in the event of an accident. These regulations work remarkably well, which is why so many people think they are unnecessary.

te_platt 14y ago
The regulation to ensure a minimal level of competence is a driver's license and the regulation to ensure recompense is (as you mention) insurance. Both of which are required of every driver whether a taxi or not. The regulations on taxis exist to protect taxi owners. And yes it is clear that Uber and Lyft are taxi services.
- johnrob 14y ago
  Uber is in an entirely different legal category. All of their drivers are registered. Their main issue is essentially a turf war between limos and taxis. Lyft and sidecar are being accused of enabling unregistered professional transportation.
Game_Ender 14y ago
Did you read the article? Uber is definitely not being served hear, and they don't call themselves a ride sharing services. Besides that, I agree with your point about these services really being car's for hire, but calling themselves ride sharing services.

dsl 14y ago

Prostitutes attempt to skirt the law in the same way by accepting "donations" for time instead of payment for services. You know how well that works for them.

citricsquid 14y ago
I thought prostitution laws were avoided by escorting, providing time with another adult (which totally won't have sex involved!) for a fee? or is that to avoid different laws?
tsotha 14y ago
Heh heh. If they're donations then it's just like church - you don't have to pay if you don't want to. On the other hand the usher doesn't beat the crap out of you if you don't.

tsotha 14y ago

I agree with the state in that these companies fall under the law as written. The real question is whether the law is really designed to benefit the public or whether it's a rent-seeking arrangement with the taxi companies.