Problems with Ride Sharing Programs

Car ownership can be too expensive for some, and taxi services can be limited and unreliable. Sometimes it benefits car owners and those without cars to participate in “ride sharing;” riders either pay drivers to carpool to work, or drivers basically become a taxi business.

The government has worked hard to create large barriers preventing people giving rides for money. It goes without saying that the taxi industry hasn’t responded well to ride-share entrepreneurs either. Generally speaking, a ride-sharing service is illegal without the proper permits — permits which are virtually impossible to obtain.

Uber, Lyft, and SideCar

Those who live in parts of cities that lack regular taxi traffic may know about Uber, the car service that will send a well-maintained black car to your location with a tap of your mobile touchscreen. Those who live outside of San Francisco may be less familiar with two new mobile-based ride share companies: Lyft and SideCar. Unlike Uber, which uses licensed limousine drivers, Lyft and SideCar rely on ordinary car owners. Uber charges users a rate based on the ride, but Lyft and SideCar prompt users to make a “donation” to their driver in a suggested amount at the end of the ride that more closely resembles an ordinary taxi fare (tracking the ride via your own GPS app). Although donations are not mandatory, a rating system allows drivers to evaluate their passengers, placing a strong incentive on riders to match suggested donations if they hope to use the service in the future.

SideCar connects people in the Bay Area who’d like to go somewhere with people who’d like to receive gas money from passengers. Lyft — also based in San Francisco — is about to hit its 13th city: Denver. All three major ride-sharing companies have been hit with cease-and-desist orders by California regulators.

While authorities complain that Sidecar does not have the proper permits and authority to operate a car service, Sidecar argues that they merely provide the communication tools to connect drivers and riders, which is not necessarily illegal. To make matters more sneaky in the way of avoiding law enforcement’s pointing fingers, payment to Sidecar is optional and donation-based.

Are Ride-Share Drivers Certified?

Drivers for Lyft and Sidecar usually have other jobs or gigs. With Lyft and SideCar, the ride sharing service is donation based (possibly to avoid government scrutiny) and the services check backgrounds on all drivers. But are drivers certified?

The California Public Utilities Commission has complained that these ride-sharing services operate without proper certification that charter services are required to hold; however, there is a ride sharing exception to the law, which provides that ride sharing doesn’t require a certificate unless the operation is for profit — hence the donation-only status of these ride sharing businesses. Nevertheless, CPUC has entered into operating agreements with Lyft and Uber.

Driver Liability in the Ride Sharing Scenario

Cease and desist letters have been sent to Lyft and Sidecar. Lyft, SideCar, and Uber have all been cited for public safety violations by CPUC. A few eyebrows have been raised, obviously, over the issue of safety in ride sharing, as compared to liability insurance, car maintenance, and certifications associated with taxi services and other public transportation.

CPUC argues that it doesn’t want to stifle innovation that ride sharing services are bringing to the table; rather, CPUC is working with these companies to lay some ground rules in the name of public safety.  CPUC has stated that authorities over passenger carrying need liability insurance, and has given a liability insurance certificate to SideCar.