Lyft ride-sharing dodges City Hall clampdown with free promotion

  • Article by: ERIC ROPER , Star Tribune
  • Updated: February 28, 2014 - 9:04 PM

For now, the service avoids “for hire” definition by offering users in Minneapolis two weeks of free service.

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In this Jan. 4, 2013 photo, Lyft driver Nancy Tcheou waits in her car after dropping off a passenger as a taxi cab passes her in San Francisco.

Photo: Jeff Chiu, Associated Press

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A ride-sharing service that has rankled regulators at City Hall has started operating under a two-week promotion that does not — for now — violate the city’s taxicab ordinances.

The city’s business licensing office had warned it would ticket and impound any vehicles associated with Lyft, since they qualify as taxicabs. The California-based company essentially allows people to become chauffeurs of their own vehicles, using a smartphone app to find passengers.

But the service launched on Thursday by giving users two weeks of free service (up to $25 per ride). That temporarily bypasses the city’s “for hire” taxicab definition.

Grant Wilson, the city’s head of business licensing, said the city won’t begin enforcement until the service begins charging customers. That gives Lyft two weeks to find a solution with the city.

The city is serious, though. Wilson said the city has already tagged and impounded three vehicles run by UberX, a similar service that launched in Minneapolis in January.

Lyft says the promotion isn’t tailored to Minneapolis. Communications director Erin Simpson said by e-mail that the company has launched similar promotions in nearly 20 cities.

Similar debates are playing out in cities across the country as Lyft and UberX expand their operations into new areas — Lyft is already operating in more than 20 communities. Seattle recently imposed new limitations on the services, allowing each of the companies to have 150 vehicles on the road.

Meanwhile, the Taxicab, Limousine & Paratransit Association, a trade group, has launched a public-relations campaign to ward off these competing companies. Under the moniker “Who’s driving you?” the group warns that the services lack adequate insurance and proper background checks for drivers.

Lyft says it provides $1 million in excess liability insurance and performs background and DMV checks on drivers. Wilson said that Lyft has not provided the city with a copy of its insurance, however, and personal insurance isn’t covered when a vehicle is used “for hire.”

Wilson added Friday that Lyft and Uber are neither “peer-to-peer” nor “ride-share” services, as they advertise, because they involve strangers giving rides to places they would not otherwise be traveling.

“They use these terms because most state laws exempt true car pools, van pools, car sharing [Car2Go], etc. from licensure,” Wilson wrote in an e-mail. Wilson also said a regional group of regulators has been actively discussing these car sharing services, and may have a metro-wide regulatory program in place that could accommodate them by June.

Lyft and UberX are already operating in St. Paul, where only cars with meters are defined as taxicabs under city ordinances. So how are things going?

“We have had no public complaints on these to date,” said Robert Humphrey, spokesman for the city’s department of safety and inspections. “We have received a couple of complaints from traditional taxi companies … just because they’re here, or we’re allowing them, not anything specific regarding they’re doing anything wrong.”

Eric Roper • 612-673-1732

Twitter: @StribRoper

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