With gas prices on the rise and a jobs crisis choking the economy, the popular, new, and innovative rideshare companies Uber and Lyft have been battling back against these economic issues by rapidly expanding to new markets, offering jobs with flexible scheduling to out-of-work folks with reliable cars, and introducing more transportation options for individuals in need of a ride. Since consumers can easily match up with local drivers through these services using a convenient smartphone app, rideshare companies also increase the number of sober rides available to people out drinking at bars, helping to reduce drunk driving fatalities.
However, Uber and Lyft have completely new business models that rely on technology that didn’t exist when most livery regulations were developed. As a result, the companies have had to battle onerous and antiquated regulations on a state-by-state and city-by-city level. In most jurisdictions, the companies have prevailed, but recent battles with Virginia’s state government have escalated and taken a turn for the worse. The Virginian-Pilot is reporting that, on Thursday, the Virginia Department of Motor Vehicles sent cease-and-desist letters to Uber and Lyft, asserting that the companies’ business models are out-of-step with state regulations. According to regulators, all drivers offering rides to the public must attain authorization from the state, except for in the case of rideshares. However, state law disallows rideshares from turning a profit in exchange for their activities.
Last April, the Virginia DMV issued a $9,000 penalty to Lyft and a $26,000 penalty to Uber for profiting on rideshares in violation of state law. The companies chose to appeal the fines and continue operating in the state. However, this new cease-and-desist order comes with a heavy-handed new threat: the DMV will expand its fines from targeting the companies in question to additionally targeting their largely cash-strapped drivers, who have been relying on income from the service to cover bills and feed their families.
Virginia’s Secretary of Transportation Aubrey Lane said of Uber and Lyft, “I actually like their business model in terms of giving more flexibility to the public, but there are some issues they need to work on and some laws that we need to change,” pointing out the need for policy changes to get state laws in line with rapidly changing trends in technology. However, these companies are already doing business in the state. Many Virginians are currently gainfully employed through them. Also, Uber and Lyft customers in the state have expressed concerns that too few taxis are available to deal with the community’s transportation needs.
According to NBC Washington, Uber representative Natalia Montalvo said of the order, “This decision is not in the best interest of Uber partners, who have been using the technology to make a living, create new jobs and contribute to the economy – or residents who rely on Uber for access to affordable, reliable transportation alternatives. We look forward to continuing to work with the Virginia DMV to find a permanent home for ride-sharing in the Commonwealth.” Lyft representative Chelsea Wilson noted, “Many of the current regulations surrounding taxis and limos were created before anything like Lyft’s peer-to-peer model was ever imagined.”
According to The Washington Post, both Uber and Lyft will continue operating in the state in defiance of the order. Virginia’s state government is conducting a study on web-based rideshare services and plans to publish a report sometime next year. However, this does little good for the companies’ current drivers, who already rely on rideshare income for survival.
Watch the below video for NBC Washington‘s video coverage on the issue.