Please ensure Javascript is enabled for purposes of website accessibility

Rideshare app companies under scrutiny by regulators

Lizzy McLellan//Daily Record Business Writer//April 25, 2014

Rideshare app companies under scrutiny by regulators

By Lizzy McLellan

//Daily Record Business Writer

//April 25, 2014

Sandra Henson, of Randallstown, became a Lyft driver in Baltimore four weeks ago, and so far she loves it.

“I love the freedom that comes along with being able to work with Lyft,” she said. “I’ve met some really, really wonderful people.”

That’s why Henson joined the ridesharing company that debuted in San Francisco in 2007. She is a retired teacher and an energy consultant for Ambit Energy, and saw the ridesharing app as a way to meet people and possibly talk to them about her work.

But the freedom she loves about her new gig might be at risk.

Services like Lyft are under review by state regulators, who are deciding whether they should be overseeing the businesses and what regulations those companies should have to meet. One similar company, Uber Technologies Inc., could face an order that would require it to apply for a permit with the Maryland Public Service Commission.

The proposed order from Chief Public Utility Law Judge Terry J. Romine would require Uber to file for a motor carrier permit. Uber has previously said it may pull out of Maryland depending on the commission’s final decision.

The order, which is pending before the PSC, says that Uber is a “common carrier” and a “public service company,” making it subject to commission regulation. However, Romine made clear that Uber could not be labeled as a taxicab service.

“Even though Uber’s services are described as ‘on demand’ I have found that they are ‘pre-arranged’ and a User may not hail an Uber vehicle in real-time (as one could a taxicab),” the order says.

Uber and Lyft both operate by allowing customers to request a ride through a smartphone app. Uber automatically charges the user’s credit card based on the starting point and destination, while Lyft suggests a donation, which users can adjust before paying.

Uber describes its business as a technology company which connects drivers to riders through its mobile apps.

But Romine’s proposed order says that the company controls the cars through the drivers and the apps, and therefore “owns” them “for purposes of satisfying the requests for public transportation for hire.” These vehicles, it says, “owned” by Uber, are not authorized by the commission to operate as carriers.

If it is confirmed, the order would not affect Lyft or Uber X, a lower-cost division of Uber. Lyft was addressed separately in an administrative meeting before the commission in November.

That meeting was held after Yellow Transportation, a taxicab company, and the Maryland Office of the People’s Council, which have been involved in the Uber case as well, requested that the commission investigate Lyft.

Uber launched in Baltimore in January 2013, and Lyft in October. Both companies supported legislation during the General Assembly session in Annapolis that would have prevented the Public Service Commission from regulating their drivers. Neither company could be reached for comment Friday.

A letter on behalf of Yellow Transportation raised concerns about safety and insurance coverage. It said that the business model “amounts to little more than a hitchhiking fee.” The letter was filed days before Lyft service launched in Baltimore.

Lyft responded to Yellow’s letter after the November meeting, stating that it should not be classified as a taxicab service because it does not advertise itself as such, cannot be hailed, and does not charge a fare based solely on time and/or distance.

Lyft also said in its response that all drivers are required to show proof of personal insurance and get excess insurance when they are driving with a Lyft passenger. The company welcomed an investigation into its operations.

Henson said she thinks Lyft’s operation has plenty of security built in. She underwent a background check, an examination of her driving record and a test drive with an experienced Lyft driver before she could begin taking passengers. She also has been coached on ways to avoid react if a passenger seems dangerous.

“The competition I know is what has taxicab companies and things like that sort of in an uproar,” said Henson. “I think what we offer is a great alternative, and I think people should be able to have an alternative.”


Networking Calendar

Submit an entry for the business calendar