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Legality of Lyft and Other Ridesharing Operations in Rochester Seem Fuzzy – For Now

Lyft is a San Francisco–based company whose mobile-phone app facilitates peer-to-peer ridesharing; enabling passengers who need a ride to request one from drivers in their area. [PHOTO: Lyft]
Last week I shared an interview with a local Lyft driver. A debate in the comments—and on Facebook—about the legality of rideshare services (such as Lyft) immediately ensued. After hearing from both sides of the issue, I’m just as confused as I was before.

On one hand, Lyft has responded to these challenges by saying its service is absolutely not illegal, and that their insurance has drivers and passengers covered. On the other hand, a local insurance agent, Michael Montag has reached out to RochesterSubway.com. He believes Lyft drivers are operating illegally – even if Lyft itself may not be illegal. I’ll post both responses here, and if you’re thinking of driving for Lyft or similar services, do your homework first…

Lyft responds to questions regarding the legality of their service.
First, here is a response from Lyft to its drivers regarding questions of insurance and legality of its service. This is John McBride, the regional Lyft coordinator:

Hey guys, I’ve noticed there have been a lot of posts and questions about insurance/legal issues recently, so I wanted to weigh in here to provide some important clarification.
1. You do not need commercial insurance to drive for Lyft. If your personal insurance company denies your claim because you were driving on the Lyft platform, Lyft’s insurance policy kicks in to cover you (please see insurance FAQ below for details).
2. Lyft is not illegal in any of the Northeast cities, and we are working with local officials in all our cities to develop ridesharing regulations that fully recognize Lyft as a Transportation Network Company just like we did in California. Read more here external link
3. Because Lyft and ridesharing are very new concepts, it takes time for us to educate regulators and insurance companies about how our business model works. Many people simply do not understand how Lyft operates, and mistakenly assert that we should be regulated and insured just like a taxi. You all are truly trailblazers in your local communities, and together we are showing people a totally new way to get around their cities.
It’s also important to remember that Lyft has made immense progress pushing at the forefront of the ridesharing movement to find insurance solutions for drivers that never existed before. Our $1 million liability insurance was the first of its kind. Then, we went a step further by provided contingent collision protection and uninsured/underinsured motorist protection. And most recently, we established our partnership with Metlife so that we can provide even better options for our drivers in the coming months. We know that the system is not perfect, and there is risk involved whenever you leave insurance companies to their own discretion. However, we are tirelessly working towards finding all-encompassing insurance solutions for our drivers. Our movement has made a great deal of progress so far, but we know there is more work to be done. Please let me know if you have any more questions!
John McBride
Regional Lyft Coordinator

Local insurance agent, Michael Montag has a warning for Lyft drivers.

And now here’s the warning from local insurance agent, Michael Montag for Lyft drivers…

NYS Department of Motor Vehicles requires that anyone driving a vehicle for the purpose of transporting people for hire must have an E license (livery license) and the vehicle must have a livery plate. NYS law also requires that any municipality issuing permits/licensing requires workers compensation and NYS Disability.
To get a livery plate you must buy livery insurance and produce a FH1 (FOR HIRE Insurance card) in order to legally register your vehicle.
In larger municipalities such as Syracuse, Albany, Buffalo and Rochester there are additional requirements external link in order to comply with their licensing permits. They have licensing fees in Rochester of $500 for the taxi plate and additional requirements to have a taxi drivers license to name only one of the requirements of the Rochester taxi squad.
Ride sharing operations such as Lyft and Uber do not require their drivers to comply with NYS law, municipal laws or NYS DMV requirements. The other issue is that the insurance companies writing the drivers personal auto insurance are not aware of the livery exposure when they drive for Uber and Lyft. If there is a claim it could be declined due to fraudulent/commercial use of the personally insured vehicle . If it is discovered they are using the vehicle for livery use they will cancel coverage.
Just because the ride share appears easy due to state of the art cell phone application it shouldn’t mean that the laws don’t apply. Mr. Cuomo, if I get paid by a cell phone app does that mean I don’t owe NYS tax????
Michael G. Montag
President
MGM Associates of Rochester external link

So what do you think? Is this a case of the entrenched insurance and cabbie industry defending their turf? Or does Lyft have some serious issues to iron out if they want to keep operating in New York state? If you’re thinking of becoming a Lyft driver, or if you have a serious opinion one way or the other, help us out and drop a comment here.

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This entry was posted on Monday, June 9th, 2014 at 7:49 am and is filed under Interviews, Rochester News, Transit + Infrastructure. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

22 Responses to “Legality of Lyft and Other Ridesharing Operations in Rochester Seem Fuzzy – For Now”

  1. Kahomono says:

    “Is this a case of the entrenched insurance and cabbie industry defending their turf? Or does Lyft have some serious issues to iron out if they want to keep operating in New York state?”

    Yes. The reason these laws exist is to defend said turf. Nevertheless, the laws DO exist.

  2. Martin Edic says:

    I believe the insurance guy is correct- you can’t just hang out your hat and start charging for rides because there is serious liability involved when you’re dealing with cars and drivers whose records are unknown. Suppose I hire one of these guys and we get in an accident, then his insurance refuses to pay for my injuries? Or he has a record that I don’t know about that may have led to the accident?
    I’m for alternative transportation innovation, especially anything that makes better use of cars, but these guys are in CA startup lalaland. In the scenario above I’d have no recourse except to sue Lyft…

  3. Joe says:

    I’m not sure if “big taxi” is really the boogey man its being made out to be. They obviously want to protect their turf, but its also the government wanting their cut.

    There is also the safety issue. Driver competence and vehicle safety. The regulations don’t do a great job of it, but without them I bet it would be much worse.

    I like the idea, but it is tough. What really separates a lyft driver from another car for hire?

  4. “What really separates a lyft driver from another car for hire?”

    That’s really the question one has to answer, isn’t it? In my experience, if regulations are a hindrance, you were probably trying to do something wrong in the first place.

    I know that’ll generate some comment, so I’ll explain: when I lived in PA, I took a job as a taxi driver for a brief time. In order to do that, I had to attend an 8 hour course, I had to take an additional driving test, I had to submit to a physical and drug screening…all reasonable requests in light of the fact that I would be taking responsibility for the lives of other people.

    The reason Lyft and other ride-share options are so cheap is because it circumvents all of that. Sure, they claim their insurance will cover me, but that’s no consolation when it doesn’t. And, let’s face it, when it comes time to deliver what insurance company DOESN’T put every effort into ensuring they don’t have to?

    These are neat ideas, but I can only think of the adage that has never failed me when I applied it: you get what you pay for. Ask yourself, does the person behind the wheel of the car that just showed up from Lyft REALLY understand they’re taking responsibility for your life?

    Personally, there’s absolutely no redeeming value in these services. One can make the argument that they make transport open to those with lower incomes, but I say even poor people deserve to know there’s a good chance they’ll arrive at their destination alive.

  5. Sean Hayes says:

    To the other commenters who question Lyft’s safety:

    You should do some research before making unsubstantiated claims:
    https://www.lyft.com/safety

    They do background checks for both criminal activity and driving history.

    “does the person behind the wheel of the car that just showed up from Lyft REALLY understand they’re taking responsibility for your life?”

    The same could be said of any driver. No one (friends, family, etc.) has to go through any sort of background check to give you a ride for free.

    Regarding taxi cabs:
    A few years ago my aunt’s car was hit by a taxi, while parked on the street. The taxi was driving down our residential side street at ~30mph at ~2AM. The taxi didn’t brush up against the driver side, it completely lost control and drove up on the sidewalk, hitting her car on the passenger side. Shortly after we also found out one of the local taxis was part of a drug ring, which may have been connected.

  6. I actually did hit that page prior to commenting, thank you, but I stand by my post. They’re at least attempting to make an effort, but the reality is they’re putting in the least amount of effort possible… probably to assuage the insurance company into providing any coverage at all. More than likely because doing it right costs money, and if you want to artificially keep prices low, you can’t have operating costs getting in the way.

    Doing a simple background check is not the same as all of the things you need to do to drive a taxi. Hell, most of the things on that list are the minimum you need just to get reasonably-priced car insurance or keep your license, and yet I still see a majority of drivers texting while driving.

    “No one (friends, family, etc.) has to go through any sort of background check to give you a ride for free.”

    Actually, they do: mine. If I know someone drives like an ass, they don’t get to drive mine. 🙂 If I don’t know how they drive, they don’t. I drive. I generally have no problem getting into a taxi, though, because I know there’s been some actual effort put in before they’re allowed behind the wheel. Does that mean I think I’m 100% unlikely to die in a taxi…

    “A few years ago my aunt’s car was hit by a taxi, while parked on the street.”

    …of course not, however anecdotal evidence is anecdotal.

    “Shortly after we also found out one of the local taxis was part of a drug ring, which may have been connected.”

    But, you don’t know? Then why add it in? Even if it were connected, what’s that got to do with anything? Because the driver might have been on drugs? It really adds no value to your story.

    We can agree to disagree, but at the end of the day I’m just not a fan. I can understand the appeal, but I see this really as just another company looking to profit by bypassing safety rules.

  7. C.R. says:

    Lyft and other similar services are a rebranding or rebooting of the taxi service for a generation of people that grew up in the suburbs never using pubic transportation, and learned thru TV or movies that cabbies are .

    Tied with an app the newcomers can sell themselves as “ride-sharing” or part of the “social economy”, which is apparently enough to merit side-stepping all of the regulations on traditional taxi services.

    Also, the anti-car mafia should be all over these people. This is NOT ride-sharing. These companies are encouraging people to get out and drive for a living!

  8. Sean Hayes says:

    @Tony,

    “If I know someone drives like an ass, they don’t get to drive mine. 🙂 If I don’t know how they drive, they don’t.”
    How do you learn how someone drives unless you’ve ridden in a car with them behind the wheel? Surely, you don’t actually run DMV and criminal background checks on your friends and family before you get in their car? Do you put them through a driving course while observing from another vehicle? These precautions would be onerous for most people, which is perhaps where the value of Lyft comes in.

    I’m unable to drive for medical reasons and often rely on friends and family for rides, some of whom I know are unsafe and shouldn’t be on the road, but I don’t have much of a choice. I’ve used 3 different Lyft drivers so far and trust them far more than most of the drivers I know.

    “But, you don’t know? Then why add it in? Even if it were connected, what’s that got to do with anything? Because the driver might have been on drugs? It really adds no value to your story. ”
    The story was to illustrate the lack of safety regular taxis have. Either a single untrustworthy taxi driver was involved in both the hit and run as well as the drug ring, or else at the same time there were 2 untrustworthy taxis drivers in operation in Rochester. It doesn’t look good either way.

  9. Martin Edic says:

    Agree with Sean, they’re fixing a problem that isn’t real. Want to travel cheap? Take the bus- you won’t die. And cabs in Rochester are relatively cheap compared to big cities and car ownership. when I gave up my car I saved $500/month. That’s 25 $20 cab rides!
    How about sharing ownership of cars? It’s insane that every individual American feels the need to own and pay through the nose for a car of their own that gets used for a fraction of the day, by one person.
    There is a big movement in the recreational boat world to share ownership and they have mechanisms for sharing liability and financial issues run through third parties. There are way too many cars in this country.

  10. “How do you learn how someone drives unless you’ve ridden in a car with them behind the wheel?”

    Followed them during a road trip? Reports from other family members or friends? Seen them drive from outside their car? As I stated, if I don’t know how they drive, I don’t let them. I drive. If that’s not an option, we don’t go.

    “These precautions would be onerous for most people, which is perhaps where the value of Lyft comes in.”

    Yes, they would be, which is why we as a society decided that if you’re going to be responsible for the safe delivery of others for pay, you have to deal with the onerous process so we can minimize safety risks (minimize, not eliminate) and weed out those who very definitely shouldn’t be driving cabs. If it were easy, everyone would get a livery license and there would be no problem. The reality is, Lyft’s “value” is derived from their being lower cost than the alternatives. Why are they lower cost? One of the reasons is because they think they don’t have to follow the law and all of its onerous processes that cost money. Granted, their biggest cost savings comes from not having to own and maintain (to a higher standard) a fleet of cabs, but just because they eliminated the physical component of being a taxi service doesn’t change their being a taxi service.

    “I’m unable to drive for medical reasons and often rely on friends and family for rides, some of whom I know are unsafe and shouldn’t be on the road, but I don’t have much of a choice.”

    Just because there’s a limited, but legitimate, need we should throw safety out the window? I’m sure your case isn’t representative of the majority of people who would use this service. For them, it’s a want, not a need. They WANT to save a couple of bucks, or they WANT to not have to drive, or they WANT to cut down on traffic congestion, or they WANT to think they’re doing something for the environment. None of those are needs like yours is. We should bypass safety and training because of that? No. You can’t solve one problem by introducing others. If the problem is there isn’t enough low-cost, SAFE medical transport available, then we should fix that.

    “I’ve used 3 different Lyft drivers so far and trust them far more than most of the drivers I know.”

    I refer you back to my “anecdotal evidence is anecdotal”. I know lots of folks who text while driving and have miraculously not gotten into an accident…yet. However, I didn’t say Lyft drivers are guaranteed to be bad drivers, just that we have nothing to go by to establish that other than some thin guidelines on the company’s website. It’s very likely the majority of Lyft drivers are safer than the majority of taxi drivers, but without some kind of registration and licensing process I have no way of determining that, do I? The first time you set foot in their vehicles, you had absolutely nothing but blind faith to go on that you’d get there alive. I don’t do faith.

    “The story was to illustrate the lack of safety regular taxis have.”

    Your story does nothing to do that. If anything, it works against you. Despite strict licensing and processes, some bad taxi drivers got through….and you want to allow a service that does away with that completely?

    “or else at the same time there were 2 untrustworthy taxis drivers in operation in Rochester. It doesn’t look good either way.”

    2 isn’t even a representative enough sample of the taxi drivers that are at the airport right now waiting for fares, let alone representative of all of those operating in the city. Replace the words “taxi drivers” in that sentence with the name of any minority group and tell me you’re still fairly predjudicing taxi drivers based on the actions of one (or even a small group).

    Even if your story were true (I’m not saying it’s not, just that I don’t automatically assume a story related by some random person on the Internet is even vaguely true), and even if the driver were part of a drug ring and the hit-and-run driver of your aunt’s car, your story simply shows that even with the best screening process some bad eggs are going to get through. Does that mean we don’t even bother to try to screen anyone out? Of course not. Hell, even Lyft sees the value in doing so…to the point at which it ceases to be profitable.

  11. Martin Edic says:

    This Lyft argument is a pure hipster lalaland discussion. They will not be able to run their company here or anywhere else, on their terms, for one reason: All this regulation generates huge fees for the state and local governments, fees they will not give up. Have you ever wondered why NYC taxi badges costs hundreds of thousands of dollars? It costs a fortune to comply and get one.

    And Tony makes a good point- the arguments here in favor are extremely idealistic. In other words, not based in any understanding of reality.

  12. @Martin, I agree to a point, however looking forward I believe all of these issues will be moot. Within 5-10 years, automated vehicles will be ubiquitous, which will cut down on the need for a service like Lyft. Why would I bother trusting a human to do it when I can have a computer drive me around? (I wasn’t being sarcastic in the asking of that. I do believe I’d be infinitely safer in a vehicle piloted by a computer than a human, and long for the utopia of an entirely automated traffic grid.)

    But, looking beyond, I doubt…okay, let me change that, I strongly hope within 20 years, vehicle ownership will be extremely limited. Once automated vehicles become the norm,I believe manufacturers will switch to a monthly subscription program and you’ll be able to have a vehicle get you around where you need to be, and move on to the next passenger once its dropped you off.

    That monthly subscription will ensure there’s always a vehicle in your driveway when you’re ready to leave in the morning, and waiting at the door of your office when you’re ready to go back home. And, before the anti-car crowd gets on me, that car doesn’t have to be a “car”, it could be a bus or other light transport filled with other passengers. 🙂

    I do disagree with regulations and fees being entirely a money-generator for municipalities. While I won’t disagree they get abused, they raise the bar to entry, which is central to my discussion with Sean.

  13. kmannkoopa says:

    I firmly believe that the law will clamp down on these ride-share services as soon as there is a high profile death (or sufficient property damage) and there is no insurance coverage. These liability and licensing requirements exist for a reason.

    It would seem that the solution for the app provider is easy, but not as lucrative — partner with existing certified licensed providers (taxis, car services, etc.) and negotiate a cut.

    Here’s an interesting 1983 article about this:

    http://www.ite.org/membersonly/itejournal/pdf/JEA83A30.pdf

  14. C.R. says:

    “It would seem that the solution for the app provider is easy, but not as lucrative — partner with existing certified licensed providers (taxis, car services, etc.) and negotiate a cut.”

    It is obvious if you want to create a long-term stable business. However most of these app-based companies only have the goal of becoming extremely popular for 1-12 months, so that one of the tech giants will buy them.

  15. kmannkoopa says:

    @C.R. — you of course are absolutely right.

  16. Urban Explorer says:

    @C.R. I agree. I haven’t tried it, but to me, the appeal of Lyft is to summon a car with my phone, have it arrive in a reasonable amount of time, and not deal with cash. If Lyft is Napster, where is the TNC version of iTunes?

    Also, my experience with cabs in Rochester is that they’re dirty, the drivers are rude, they balk at taking credit cards even when their signs say they do, and don’t like short hops. I tried to get a cab from the train station to the downtown parking garage where my car was parked late one night and got fed up with the attitude of the train station cab drivers and just walked.

  17. Peter says:

    “Also, my experience with cabs in Rochester is that they’re dirty, the drivers are rude, they balk at taking credit cards even when their signs say they do, and don’t like short hops.”

    They are also expensive. They charge $2 or so for each extra person on top of the $2.50 starting fee and the regular mileage charge, making sharing a cab pointless. If you are trying to call one, you can search Google Maps, where you may have to call a few different companies and then go through the switchboard to reach a driver. Lyft is so easy and pleasant that I’ll never take a cab again.

  18. Linda says:

    I have used Lyft several times and they were wonderful. Taxis here in Rochester are disgusting. I primarily walk or take bus but Lyft was godsend other day when bus messed up schedule. Lyft drivers were all polite, competent and very eager to do their best. App so easy to use. I hope they succeed.

  19. Two weeks ago I saw a dude literally throw himself out of a moving cab on Kings Highway at Titus Ave. He rolled out of the rear passenger door into the street.

    My first reaction was “Holy shit, someone just pushed that guy out of a moving cab.” Then the guy took off around the corner and ran east down Titus.

    So he was either trying to avoid paying the fare, or maybe it was the filming of the Amazing Spider-man 3. Either way it was surreal.

  20. Joe says:

    I too have had issues with calling to request a cab and one never coming.

    I guess to answer my own question from before. If lyft functioned like a ride share, say drivers program in their route before departing and the program would match them to ride seekers who share all or part of their route then it would be true “ride sharing”. But the more I think about it lyft is just an underground taxi service.

  21. punkrokk says:

    I have used Lyft and Uber in the Northeast, London and a few other countries.

    I also use cabs in Rochester and elsewhere very regularly.

    My problem with cabs in Rochester is that if you use a dispatcher, they are rude, make you feel like an ass for asking them to read back your address, and won’t let you schedule a ride half of the time.

    In addition, many times they are not on time, or take 30 minutes when they say they will be there in 5. I was late to a wedding once – I called for a cab at noon, for 1:30, and they showed up at 2:15.

    Then – to top it all off – the customer service is a joke. Part of this is because if the company does you wrong, the cabbie isn’t able to give you a discount. The guy on the other end of the phone is basically like – too bad.

    I have had good luck with taking a cabbie I like personal phone number. I have a steady guy in Rochester during the day. Always on time. Cash only though. Receipts are hard to come by also.

    Finally – when it comes to luggage, the cabbies from the airport here just throw your stuff around – if you can get them out of the car.

    In Austin – they cabbies have an app like uber and lyft.

    I agree with all the safety stuff, but the current regulation doesn’t address customer service, and Lyft hits a home run here in Rochester on that front.

  22. Looks like Lyft has sacrificed Rochester and Buffalo so they can continue to operate in NYC. Service will be suspended on August 1st… http://www.democratandchronicle.com/story/money/business/2014/07/25/lyft-rochester-buffalo-new-york-city/13159965/


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    For questions about the Rochester Subway Poster or about your order, please email info@rochestersubway.com.

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    About the Rochester Subway Poster...

    ¤ Parkleigh [ ...map it ]
    ¤ Poster Art [ ...map it ]
    ¤ Rochester Public Library Store [ ...map it ]

    ¤ Rochester Subway Poster Press Release
    ¤ Article by Otto M. Vondrak
    ¤ Design by Mike Governale

    More About The Rochester Subway

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    ¤ Rochester Subway (Wikipedia)
    ¤ The End of the Line - Rochester's Subway, DVD
    ¤ Abandoned Subway Photos (Opacity.us)
    ¤ Walking the Rails (YouTube Video)

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