Legal Issues with peer-to-peer Ridesharing

January 30, 2013

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Peer-to-peer ridesharing company Tickengo has retained former San Francisco mayor Willie Brown to serve as their legal council in dealing with the cease-and-desist letters that the California Public Utilities Commission (CPUC) has been sending lately. According to Forbes, Brown is suggesting that it be legal for private citizens to offer peer-to-peer rides in their car and collect “donations” for this up to a maximum of the full cost of car ownership. AAA puts this at $8,776/year for an “Average Sedan” in an average location. As soon as drivers earn more than this in a year, they would become illegal under Brown’s proposed rules.
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There are a few problems with this approach:

  • Will users with more expensive cars (which cost more to own) be allowed to drive more than users with smaller, less expensive cars?
  • Owning a car in a dense metropolitan area can be significantly more expensive than average, with parking and insurance costs being higher
  • What if a driver owns more than one car? Will they be allowed to use one car up to the $8,776/year and then switch to their second car?
  • Will this maximum apply to the driver or the car? Can the same car be used by someone else to achieve their yearly maximum?

Tickengo competitors Lyft and Sidecar did not follow the CPUC’s cease-and-desist letter (and $20,000 fine) arguing that the they don’t actually operate the cars or employ the drivers. These are just technology companies matching people up for carpooling (much like the government sponsored 511 Ridematch attempts to do). Tickengo removed its “instant ride feature” and the CPUC subsequently dropped the cease-and-desist. Lyft announced today that they have reached an interim agreement with the CPUC that allows them to operate while the CPUC debates rulemaking for ridesharing in California. (see official letter)

The CPUC doesn’t regulate “passenger vehicles carrying passengers on a noncommercial basis” – so the question is whether or not peer-to-peer ridesharing is commercial. If it turns out that matching up drivers and riders is illegal this may also imply that the Bay Area’s casual carpool is also illegal. It may also mean hiring a Task Rabbit or Exec to drive you somewhere isn’t allowed either.

Tickengo currently supports trips in six other non-california cities as well as Los Angeles, so even if ridesharing is declared illegal in California it can stil flourish elsewhere. However, given San Francisco’s compactness and high proportion of tech early-adopters, not allowing innovative transportation to operate in California would make it more difficult for services like Tickengo, Sidecar and Lyft to get off the ground.

If you haven’t yet tried peer-to-peer ridesharing, give it a try. A high-quality ride with reliable pickup, and the suggested donations end up being less-than-taxi prices.