Ride-sharing companies have exploded in popularity over the past few years and have expanded to hundreds of cities. While they may be convenient and less expensive than other livery options, are they really safe for consumers? Here’s what to know.
First, let’s take a look at the licensing requirements for most regular taxi drivers and public chauffeurs. In Chicago, for example, all public passenger vehicles must have a license issued by the Department of Business Affairs and Consumer Protection in order to legally operate. In order to obtain this license, a driver must attend the Public Chauffeur Training Institute and pass a written exam, as well as a physical exam and a criminal background check. As another example, Hoyt Livery drivers are technically employees of the company—licensed, insured and trained in Hoyt’s standards of excellent service.
The two largest rideshare companies, on the other hand, are not regulated or licensed in some cities, like traditional taxi services.
Most rideshare companies have safeguards of sorts in place, but these safeguards are at the discretion of the companies themselves and are therefore not standardized.
One popular rideshare company claims that it performs criminal and driving background checks on its drivers as well as vehicle inspections for their cars. Another says that it conducts a “rigorous screening process” for its drivers, whose personal auto insurance coverage is verified, although whether insurance companies would actually pay out personal coverage in a commercial situation is uncertain.
In addition to the personal auto coverage the drivers must carry, commercial coverage is provided by two of the largest rideshare companies as an extra protection; it covers riders from the moment their request is accepted until their trip is complete.
Also, most rideshare companies rely on a feedback system from riders as a way of learning about the quality of their drivers, and weeding out less-than-ideal drivers, as well as riders.
Why the difference in regulations and requirements?
How is it that rideshare services can operate without the same oversight as regular taxis? Partly because rideshare companies are a relatively new frontier, and as such, technology-driven rideshare companies are operating in a legal gray area.
What about rideshare companies that operate on a donations-only payment system? The donations-only business model is enticing for consumers, but further complicates the practical status of such companies. Is the company providing taxi service if they don’t technically require payment? And if they aren’t technically a taxi service, do they need to abide by the same regulations as taxis?
Backlash from cities and states
The business model has received backlash from some city government officials, who believe they should be licensed and registered to operate, as well as an international association that represents 1,100 traditional taxi companies. The Minneapolis City Council has also recently legalized rideshare services, which allows the city to regulate and license them.
The two largest rideshare companies were halted indefinitely in Pittsburgh in July 2014 by the Pennsylvania Public Utility Commission to check if the companies have adequate insurance, appropriate driver background checks and inspections. Other governments have taken similar action.
A spokesperson for the Taxicab, Limousine & Paratransit Association was quoted as saying, “These companies are operating illegally. They’re under investigation in many municipalities for their insurance and background checks.”
Steps are already being taken by many states to regulate rideshare companies with the public’s safety in mind. Not long ago, the Illinois state House passed a bill aimed at protecting consumers by requiring rideshare companies to conduct background checks for all drivers and safety checks for the vehicles they use. They will also require companies to get commercial insurance coverage for all drivers. Many rideshare services claim to already take these steps, but state regulations are meant to ensure that these rules are uniform and enforceable.
The takeaway: rider beware
While ridesharing is a convenient and cost-effective way for many people to get around town, realize that they do not have the same regulations and licensing requirements as regular taxi and limousine companies. As a result, rider beware—consumers need to be comfortable with riding at their own risk.