The district attorneys of California’s two largest cities announced Tuesday they are suing Uber, accusing the ridesharing company of misleading customers about safety - and the Los Angeles City Council voted to send letters to AirBnB users telling them they have to pay occupancy taxes.
The moves show increasing frustration by public officials about how to regulate app-based businesses that are part of the sharing economy.
“We would like Uber to stop advertising that they have the gold standard in background checks,” Los Angeles District Attorney Jackie Lacey told reporters. “That is simply not accurate.”
Lacey said Uber doesn’t fingerprint drivers as taxicab companies do. Instead Uber drivers fill-out an online form, which is ripe for abuse.
“For instance, you could provide your brother’s information or your sister’s information, and there’s no way to check that information is accurate,” Lacey said.
Uber successfully lobbied against state legislation, Assembly Bill 612, that would have required drivers to be fingerprinted, according to the suit. The suit also claims Uber pockets San Francisco's $4 airport fees and is operating illegally because meters aren't certified by the Department of Food and Agriculture.
The company faces fines of up to $2,500 for each violation of state law. A judge could order Uber to halt operations, but that’s very unlikely, Lacey said.
In a written statement Uber said it will “continue to engage in discussions with the District Attorneys."
At the same time, Lacey and San Francisco District Attorney George Gascon announced they'd settled similar complaints against Lyft. That rideshare company has agreed to change its business practices and pay a half million dollar fine.
“Lyft has shown itself willing to address the issues that Uber has not been willing to address,” Gascon said. “It is acting as a responsible corporate citizen.”
In a press release, Lyft said the settlement "demonstrates our shared commitment to consumers and innovation."
Lacey said she's also engaged in negotiations with is the smaller ridesharing operator Sidecar.
At Los Angeles City Hall, council members agreed to allow the Department of Finance to send reminders to short-term hosts using AirBnB, VRBO and other services that they're liable for the city's 14 percent occupancy tax. The notices are not tax bills.
City officials could not immediately say how they would identify short-term hosts who should receive the notices. Nor could the Office of Finance determine whether any short-term rental hosts are currently paying the city's bed tax.
A spokeswoman for AirBnB said the company encourages all hosts to comply with local laws and released a written statement:
"We already ask all hosts to certify that they will follow local rules, including tax rules. We’ve begun collecting and remitting these taxes on behalf of our hosts and guests in Portland and San Francisco and will take the lessons we learn there and move forward," said Marie Aberger. "Even though this is a complicated challenge, we want to ensure that tax rules for home sharing are clear, easy to follow, and protect the privacy of Angelenos."
VRBO did not respond to requests for comment.
An economic study released last week by AirBnB found 4,490 L.A. households rented space to AirBnB customers between May 2013 and April 2014. That generated $312 million in economic impact, according to the company's report.