Shaving New York: Lyft receives cease-and-desist on eve of expansion
Lyft’s expansion to New York has been delayed by a cease-and-desist letter from the city’s district attorney, who says the company has “thumbed its nose” at regulators who have warned it that its mustachioed ride service can’t operate in the city. The company must appear before the district court by July 31 to plead its case and prove that it can operate.
Lyft originally planned to introduce its service in Brooklyn and Queens tonight -- now it must either delay the service's launch or risk the ire of New York's regulators. The company said in its announcement that it was taking all precautions to ensure that its service is safe for riders:
As always, safety is our top priority and every driver has undergone a screening process that is more stringent than what’s required for NYC taxis, including a strict background check, vehicle inspection and $1,000,000 insurance that provides more than three times the $300,000 minimum for taxis.This might make it seem like Lyft is complying with New York's laws, but the company fails mentioning the many differences between its service and the cars driven by taxi drivers, livery service drivers, and the legions of people moonlighting for services like Uber. As NYC District Attorney Eric Schneiderman explained in the cease-and-desist letter to the company:
Lyft, which is not itself licensed to do business in New York, uses drivers not commercially licenses, vehicles not licensed for commercial purposes, and vehicles not commercially insured. Lyft believes that because it markets its service through a smartphone application ("app") and calls its fares "donations" it is above the law. Despite the well-established, long-standing public policy behind licensing and insurance, it attempts to substitute its own judgment for that of the legislature, and forges ahead.It's unclear how the company plans to respond to these issues. A company spokesperson didn't clarify much when she gave a comment to the Verge, saying little more than Lyft loves working with regulators and has successfully done so in cities around the US, the not-so-subtle implication being New York is the ridiculous outlier in a country of sensible states.
It bears stating that Lyft has been targeted where uberX, the low-cost tier of Uber's ride-hailing service, has not. The big distinction between the two services is that Lyft drivers are not licensed to operate within New York. Conversely, uberX's drivers have met all the licensing and insurance-related aspects of driving professionally in New York, despite driving vehicles a bit less swanky than their Uber Black counterparts. Apparently, Lyft's fist-bump and front seat riding system have failed to convinced regulators that the company is not offering a transportation service.
Maybe Lyft could just do what Uber did and hire a former official from the Taxi and Limousine Commission – the principal organization against which ride-hailing startups compete in their efforts to receive approval from regulators. As I wrote when that hire was announced:
Uber couldn’t have picked a better time to mature. It has been embroiled in controversies for the last few months — first because of how it handled of one of its drivers striking and killing a young girl; then because of concerns over the information it gives its drivers; and again because it added a surcharge to all fares in order to cover safety expenses. A company worshipping at the cult of disruption’s feet can’t handle those problems as well as a company that understands the importance of working with both regulators and its customers.Now Lyft needs to find a way to do something similar. If it's looking for a place to start, doing away with the gaudy pink mustaches its drivers attach to their cars might be a good option.
[illustration by Brad Jonas for Pando]