Peer-to-peer ridesharing services have already had many legal challenges as they disrupt existing transportation services and work within regulations that were not written with them in mind.
On June 26, Lyft, Sidecar and Uber received cease-and-desist letters from the Los Angeles Department of Transportation (LADOT). (full letters here, here, and here). They already went through a similar situation with the California Public Utilities Commission (CPUC) last year. After negotiating with the CPUC, an agreement was reached in January of this year allowing all three companies to operate in the State of California.
LADOT threatened in the cease-and-desist letter that it would arrest drivers and impound their cars for up to 30 days, although this has not happened yet. All three companies continue to operate in Los Angeles. Lyft is asking anyone who enjoys using their service in Los Angeles to contact key city officials to voice support.
In spite of any California setbacks, Lyft announced their San Diego launch on July 3rd. Lyft now operates in three California cities: San Francisco, San Diego and Los Angeles as well as Boston, New York and Chicago.
Peer-to-peer carsharing may be illegal in New York State according to the Department of Financial Services. They issued Relay Rides a cease-and-desist letter last week after which the company suspended all carsharing in the entire state of New York.
Innovation, by its nature, does not always fit within existing structures. Although we’ve been careful to ensure the protections offered to our member community comply with legal frameworks around the country, we learned in conversations with the NY Department of Financial Services that it believes there is noncompliance with certain unique aspects of NY insurance law.
Relay Rides website now announces “RelayRides has car rentals across the country, except New York.”
Pando Daily suggests that this may not have much chilling effect on the industry: Relay Rides is still going strong in California, Massachussets, Pennsylvania, DC, Georgia, Washington, Oregon, Illinois, Colorado and Texas and more. Just last week, they acquired rival peer-to-peer carsharing company Wheelz. Getaround, the other major peer-to-peer car rental company, does not offer service in New York state and so isn’t affected by this issue. Peer-to-peer carsharing will continue to grow, but New York will be missing out on innovative transportation options. Startups in the transportation space may look elsewhere when considering where to locate.