On Monday the L.A. Department of Transportation sent cease-and-desist letters to three popular car-for-hire companies: Uber, Lyft and Sidecar. The companies are charged with using unlicensed drivers and not obtaining the necessary permits to operate.
The three car-for-hire services use mobile applications to connect patrons to drivers in their area, and though Uber does dispatch some professionally licensed drivers, all three companies connect patrons to casual, unlicensed drivers.
"Our response is that though the City of LA regulates taxis in Los Angeles, for-hire transportation is regulated by the California Public Utilities Commission," said Travis Kalanick, Founder and CEO of Uber. "We have a signed letter, an agreement with the state of California, stating that everything we're doing is legal and lays out the requirements to make sure all transportation providers that we connect individuals and citizens to is safe."
Last November the companies were cited by the California Public Utilities Commission for public safety concerns associated with not providing insurance and liability coverage. But all three companies eventually reached agreements to keep operating.
Monday’s cease-and-desist letters are a new move from L.A. transit authorities to curb operation by these companies, and it shows that authorities are backing traditional taxi companies, who have struggled with the new competition. Those companies, like L.A. Yellow Cab, call the newcomers “bandit cabs” who bypass safety regulations.
"The question is are these vehicles operate like taxi cabs, and if they do, then they fall under the city of LA regulations," Said Bill Rouse, General Manager of Los Angeles Yellow Cab. "Even though it operates by GPS, it acts in exactly the same functionality as a taxi meter. A taxicab is any vehicle for hire that uses a taxi meter. It doesn't have to say the word taxi on it."
Do traditional taxi companies have a point? Are Uber, Lyft and Sidecar services unsafe and uninsured? Is this really a safety issue, or just a matter of protecting big taxi companies from serious competition?
Bill Rouse, General Manager of Los Angeles Yellow Cab and President of the Taxicab, Limousine and Paratransit Association
Travis Kalanick, Founder and CEO of Uber, one of the three car-for-hire companies targeted by the Los Angeles Department of Transportation.