Greater Greater Washington

How should government regulate private ride sharing?

The vast majority of cars being driven around the city have empty seats. Why not let people sell some of them, make some money, and provide more transportation without more traffic? One of the obstacles is that these services often run afoul of regulations designed to protect consumers.


Image from SideCar.

A few companies are trying to make private ride sharing a reality. SideCar lets anyone sign up, undergo a background check and other reviews, and then become a "community driver" who can offer others rides through the service for a "donation."

This is part of a wave of startups providing what's called "collaborative consumption," where people have an economic arrangement to share a resource. There have been services like time share vacations and Zipcar car sharing for many years, where a company owns some resources and sells shares in them, but the newer trend is companies that try to help individual people sell unused capacity in stuff they own.

Airbnb, for example, lets you rent out your apartment when you're not there for extra cash, and makes it possible to find a much more affordable place to stay in busy cities where there aren't that many hotel rooms.

Regulations, however, often don't really account for individuals renting out their own stuff. They usually assume that anyone providing such services is a company that does so as its business, and can undergo inspections, file for permits, and so on. Plus, these regulatory processes try to ensure that the products are safe and healthy, that nobody's getting scammed, and so on.

The new-style collaborative consumption startups are solving the consumer protection problem in a bottom-up, social-media way: people rate buyers and sellers, and a strong reputation replaces a regulator's review. This is what eBay did to give people confidence in buying things from strangers instead of from stores or established catalog companies.

There are the occasional horror stories, but then, regulators miss things, too. But Airbnb is illegal in most cities, and some cities are cracking down, often at the behest of the hotel industry or neighbors who don't like strangers coming and going. Mainly the transactions happen outside the law's blessing, it's making buyers and sellers happy, not causing a lot of trouble, and eventually cities will probably adjust laws to come to terms with it.

What does this mean for ride sharing? Taxi rides are a particularly heavily-regulated area, with powerful driver lobbies that want to restrict the supply of rides. They weren't happy about Uber, and really won't be happy with ride sharing.

Plus, regulators have some legitimate fears. Cars can be really dangerous. Is it important to give people assurance they're riding in a safe one? You're under the physical control of another person. How can we be sure that person isn't going to do bad things? A woman has accused an Uber driver of raping her; police investigated, but prosecutors aren't pressing charges.

Are these roles the government should play? With Uber, many people argued that regulators ought to ensure the driver is well trained, properly licensed, and not a threat. They should ensure the car is safe and well-maintained. But don't regulate the prices, since people can choose to ride Uber or not and don't need the government to decide how much it should cost.

Now, ride sharing companies are essentially trying to take the next step. Must the drivers all have commercial licenses and commercial vehicles? Or can we let anyone sign up to give others rides? Can the companies, like SideCar, self-regulate?

Certainly it's in SideCar's, and Airbnb's, and Uber's interest to be sure everyone is safe. SideCar has extensive safety information on its site. One theory is that these companies will make sure it's safe, or else go out of business. After all, it's easy to spread a bad experience on Twitter, so even a small number of problems could earn the company a bad reputation.

The DC Taxicab Commission isn't ready to embrace this. Having just created regulations for sedan drivers that regulate much less than they are used to, they'll need more outside pressure if they're going to let ridesharing get an even lighter regulatory touch. And should they?

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David Alpert is the founder and editor-in-chief of Greater Greater Washington. He worked as a Product Manager for Google for six years and has lived in the Boston, San Francisco, and New York metro areas in addition to Washington, DC. He now lives with his wife and daughter in Dupont Circle. 

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Plus, regulators have some legitimate fears. Cars can be really dangerous. Is it important to give people assurance they're riding in a safe one? You're under the physical control of another person. How can we be sure that person isn't going to do bad things?

I'm not sure those fears are very legitimate, though it depends on your definition. The fact is, riding with a stranger is a very safe activity absent any regulation, with only a very small percentage of bad people doing bad things to a passenger. Add to it screening by the Sidecar folks, and you further reduce the already low risk. And, if you're looking to government regulation as the means to prevent an extraordinarily small number of bad people from behaving badly some time, then a look at DC's taxi system shows that's not a solution.

Rather, let's look at it for what it is: if a person wants to give a ride to a stranger and said stranger is ok with it, shouldn't that be allowed? The only thing Sidecar adds is a voluntary donation. And, regarding safety, how many cases of crime do we have resulting from the thousands of slug line passengers over the years? Any?

I personally don't feel the government should be in the business of regulating whether a person is able to provide a ride to a consensual stranger, who may chip in for gas or provide some other compensation. DC, however, requires a business license for "any business activity"- which would include everything from this to blogs.

by Matt A on Apr 16, 2013 11:04 am • linkreport

Regulation aside, this is a question of liability and the risk that these drivers are putting themselves in by going out there and driving people around for money.

The whole Sidecar model seems to be one civil lawsuit away from falling apart. Eventually a passenger is going to be hurt or killed (as you say, driving is dangerous). The driver’s insurance company thinks they are covering an individual doing typical driving, so it’s possibly that they deny the claim on the grounds that the driver was operating a business outside of their policy. The passenger then goes and sues the driver and devastates them financially.

Taxi and limo drivers have to purchase commercial insurance coverage to protect themselves from this exact sort of thing. Either Sidecar drivers will have to do the same, driving up the cost of doing business, or the risks presented by driving people around without any insurance coverage will scare off drivers who might have considered it otherwise.

by RP on Apr 16, 2013 11:12 am • linkreport

The status of SideCar depends on a few things:
1. What are the driving patterns created by SideCar? Is it really just strangers giving people rides when they are going someplace, or is SideCar attracting a set of people who are using it as their primary business, driving around town looking for fares? If it's the former I'm not sure it's that big a deal. If it's the latter then you have essentially generated a whole bunch more driving miles that are probably more dangerous than those driven by licensed taxi drivers. And as RP points out, if your insurance company thinks they are covering a normal driver, they will not pay out for an accident incurred while driving your unlicensed taxi service.

2. The "donation" system. Is it really a "voluntary donation"? Or if I as a customer continuously underpay do I get banned from the service? If you are going to argue that business guarantees are the same as governmental guarantees (e.g. that drivers/cars are vetted, etc) then the penalties for not paying are equivalent as well (you can be arrested for not paying cab fare), and the payment hardly constitutes a "voluntary donation."

by MLD on Apr 16, 2013 11:24 am • linkreport

"One of the obstacles is that these services often run afoul of regulations designed to protect consumers."

This should read "afoul of regulations designed to protect existing businesses"

by Hadur on Apr 16, 2013 11:24 am • linkreport

Re: RP's comments and insurance- A third option exists: Sidecar could provide guaranteed insurance coverage if the driver's policy denies a claim: http://www.side.cr/driver_guarantee

by Matt A on Apr 16, 2013 11:25 am • linkreport

Minimum regulation is required. You can require people to fold into existing structures, and pay taxes.

One of the problems with many of these services is that they do not collect taxes, or comply with existing regulations. In fact, many of these services are designed to evade existing regulations and semi-run as private people. That is not ok. You can require Airbnb hosts, and Sidecar drivers to pay taxes, and to run their activities as a business, if as simple as an LLC. If such businesses run a certain amount of businesses, they should follow existing rules for such businesses. Fire safety. Driver safety. Etc.

Does that make things much less atractive? Yes. But also more fair. You may not be running a Marriott hotel from your home, but you are competing with Marriott.

This is also a great opportunity to go through the rules that exist for cabs and hotels. Large hotels often get unwarranted tax breaks. Taxi companies have odd semi-monopoly status. All that can go out the window.

by Jasper on Apr 16, 2013 11:28 am • linkreport

Hands off. For now. As it supports a transit, bike, walk, car-free lifestyle. Like slugging, we promote it. And it goes back to the weekend's column Can Government Expiriment? http://greatergreaterwashington.org/post/18494/can-government-experiment/ Let's give the market a shot without mucking it up.
Chris Hamilton
Arlington County Commuter Services

by Chris Hamilton on Apr 16, 2013 12:09 pm • linkreport

These services are not competing with Marriott nor the taxi cab industry. Simply because the possibility exists of a 'lost sale' on the part of those industries, does not mean that you are operating even remotely the same service, or should be regulated as such. Since when am I, as a private individual, not allowed to engage in a mutually beneficial business arrangement with another private individual? It really should not be necessary to have this discussion every time some new disruptive technology emerges which are universally to the benefit of private consumers, and for which the complaints almost always originate from the threatened business lobby simply seeking to preserve their existing business model.

by Chris on Apr 16, 2013 12:11 pm • linkreport

There is no reason why the city shouldn't regulate when people act like a business. Offering your home as a sublease is one thing...but renting it out like a hotel is a whole 'nother game. There's also no reason why people operating vehicles providing public services (transportation) shouldn't be as well.

I would not want to live near a revolving door and imagine most wouldn't either. Want to operate like a business...get the proper licensing.

by HogWash on Apr 16, 2013 12:18 pm • linkreport

@ Chris:Since when am I, as a private individual, not allowed to engage in a mutually beneficial business arrangement with another private individual?

You are plenty allowed to engage in business arrangements. As long as you stick to the rules we agreed on through the democratic process. When selling food, you need to follow rules to keep the food from being spoiled. When you drive around people, you need to have a driver's license, that ensures you are aware of the rules of the road. When you do anything with dangerous chemicals, you need to take care of safety. When you provide legal advice, you need to have passed the bar. When providing financial services, other regulations kick in. When you sell alcohol, you need a license.

Regulation in itself is not bad. It keeps us safe.

by Jasper on Apr 16, 2013 12:49 pm • linkreport

1. First, the arguments about this, and services like Uber ignore the hundreds of years of law and experience developing and regulating "common carriers."

If you are making your services available to others, then you're a common carriet and can't be discriminatory, have to follow basic standards for safety (cf. the "Chinese buses") etc.

2. But since it's an individual service, fundamentally, it's not different than carpooling.

Or ride sharing like old ride share boards at universities or old classified ad categories in alternative newspapers.

or even the mobility services provided by various "aging in place" village programs.

or gypsy cabs, etc.

3. But perhaps the most important thing is that it's going to be a niche business forever. You can spend a lot of time dealing with it, but it lacks the ability to scale or to make much of a difference on a "mass" basis, although it will be important to the individuals who make a little money, and the people who get around more easily.

4. So how should it be regulated? As people mentioned above, there are liability and other issues.

E.g., look at how the "gypsy cab" from Loudoun ended up being a rapemobile.

So yes, it should be regulated. You should have to register. Have a registration number. Have a special umbrella policy that provides protection to riders and others.

by Richard Layman on Apr 16, 2013 2:04 pm • linkreport

My friend's building got bedbugs and the source was a condo that the owners rented out on a regular basis via AirBnB. While I understand that anyone could bring home bedbugs from anyplace else, I have to imagine that a constant stream of travelers greatly increases those chances.

by Adam L on Apr 16, 2013 2:36 pm • linkreport

They shouldn't regulate it.

by Nick on Apr 16, 2013 3:40 pm • linkreport

Honestly I can't see myself ever using it. I got in a gypsy cab once and it made me uncomfortable when I realized (mostly because the guy had absolutely no idea where my neighborhood was). On the otherhand, it provides a service that some people rely on and certainly outlawing it doesnt make sense. Some kind of confirmation that these people are registered and are using their real identity is probably enough for me. Probable also some way to make sure this doesn't become a back door way to operate a cab would be nice although I don't really care if that means more cabs for me.

by Alan B. on Apr 16, 2013 4:17 pm • linkreport

There used to be a very common model of ride sharing, which was unregulated. It was called hitchhiking.

It died out in the late 70s/early 80s right around the time that crime peaked and abduction hysteria took off. Most of the time, it worked well, but occasionally people were raped or murdered. A corporatized version of this is likely to eventually have similar problems, though rare, and it's not likely to turn out well.

by Rich on Apr 16, 2013 4:27 pm • linkreport

It seems to me that single rider car use is overlooked as the main cause of our regional transportation problem. If you get on the highway in Northern Virginia or Montgomery COunty at rush hour the cars are back to back and almost every car is driven by a single driver. People should certainly have the choice to travel this way, but could government and technology combine to incentivize car pooling?(beyond your standard car pool lanes) For example, what if cars had sensors installed that car-poolers could check in on? If a car was full of registered car poolers, then the riders/drivers would get a subsidy or a tax break or free gas or something.

by Matt Engel on Apr 16, 2013 4:49 pm • linkreport

Generally regulation of some sort is not a bad idea if the environment is such that where individual providers can largely get away with bad behavior. Those with a brand to protect probably don't need it.

Ride-sharing is probably in the former category but so far in this city it has largely worked anyway. Overdoing regulation would, of course, shut down an otherwise good thing.

by Jeff on Apr 16, 2013 6:57 pm • linkreport

I believe that Dynamic Ridesharing is a valuable "new" tool in the demand management toolbox and it is helping focus new attention on ridesharing generally. We all know that the riesharing concept is not new; what's new are the mobile apps plus the private companies offering these services. It is not a "silver bullet" that will replace the need for traditional ridesharing services; rather, it expands the range of potential services available.

The concern with Uber, Lyft, Sidecar, etc. is that they appear to be illegally competing in the Taxi market under the guise of "commuter ridesharing." Although some of their trips may be true "shared commuter trips," some are really taxi rides with drivers who are not commuters but offering rides to any destination to make a buck. Some cities are pursuing legal action against them (see: http://online.wsj.com/article/SB10001424127887324595904578121440962068074.html ). However, many media commentators feel they are innovative and useful new services. I feel that their claim to be promoting Ridesharing as a defense against legal actions will damage the "good will" toward Ridesharing, which many of us in the ridesharing industry have built over four decades. Simply put, unregulated taxi services are not Ridesharing. At a minimum, these new companies should prove, via an impartial evaluation, that they are truly carrying only shared commuter trips, and not "anywhere-to-anywhere" trips. I doubt they can or will.

by Nicholas Ramfos on Apr 17, 2013 11:47 am • linkreport

I think the taxi companies should be very, very afraid. Protected by regulators for a century, they have never upgraded their service . They will be another victim of technology and deserve it far more than bookstores, newspapers, the music business, etc.

Companies like Sidecar and Lyft, by using social networks and reputations are going to provide so much better service that we'll wonder why it didn't happen sooner.

by Jim Morris on Apr 17, 2013 12:28 pm • linkreport

I can't say I think companies like Sidecar and Lyft will be anything but marginal influences. Some people may use them, but I think lots of people will be frustrated by idiot drivers who don't have a clue where they're going.

Cabbies may be aggressive drivers but they are better drivers than the average person and I have to guess better than the kind of person who finds driving people around enjoyable yet is too lazy to go out and get a job driving a cab.

by MLD on Apr 17, 2013 12:41 pm • linkreport

My good friend Nick and I have the same mission. I agree with the first paragraph of his comment wholeheartedly. I just suppose I'm willing to give the marketplace a shot at figuring this out before we call for heads and jump to protect the old ways of the existing taxi and ridesharing services. We should be promoting anything that gets people to use their private auto's less because that means they'll be taking transit, biking and walking more. Or sharing the ride and not driving alone. So where does a dynamic ridehsare company like http://www.avego.com/ fit in? These guys seem good to me. Here's a whole list of rideshare companies http://www.commuterpage.com/pages/transportation-options/ridesharing/ridesharing-ridematching-services/. We should promote them all. And it isn't all about commute trips. In the urban core we are trying to create places where you don't need cars. So shouldn't people have the ability to share a ride to the Nats game or a concert or to Ikea too?
Thanks,
Chris Hamilton
Arlington County Commuter Services

by Chris Hamilton on Apr 17, 2013 12:45 pm • linkreport

The taxi industry is regulated because it is so dangerous. Drivers get robbed and killed. Passengers get assaulted. These things happen weekly across the country.

Ridesharing companies treat the taxi industry like a playground. They employ non-professional drivers who lack proper background checks, adequate insurance coverage, and driver training.

Want a sense of how bad ridesharing companies can be? Check out this The New Yorker article about UBERx launching in Austin: http://www.newyorker.com/online/blogs/newsdesk/2013/03/the-cost-of-ubers-free-rides.html

by DaveSutton on Apr 17, 2013 4:08 pm • linkreport

This SideCar review also does not give me high hopes about "ridesharing" with randos:
http://blogs.phillymag.com/the_philly_post/2013/02/25/review-google-philadelphia-ride-share-service-sidecar-shut-down-by-city-ppa/

by MLD on Apr 17, 2013 4:20 pm • linkreport

It's absurd to suggest that faux-rideshare services cut down on congestion and pollution. Exactly the opposite is true. Sidecar is giving motorists strong economic reasons to keep their cars (or to buy more cars) because now they can make money with the car. Sidecar encourages MORE private car ownership, not less.

by Charles Rathbone on Apr 17, 2013 7:02 pm • linkreport

My own experience of these services, having used them all as a rider, is that drivers are either full-time or part-time “for profit” drivers. In every case it’s not about sharing the cost of the ride: drivers earn between $20-$35 per hour ($180-$200 per day). In fact, Lyft advertizes for driver recruits with this very message.

Again my practical experience is that drivers aren’t picking up riders along their route. They are driving the city streets, waiting for a ride request. And just like some of the great taxi apps (Hailo) they then respond to this request. In one case (Lyft) the rider doesn’t even declare where he/ she is going. That certainly falls foul of the definition of "ridesharing" as all of us in the industry understand it.

And last but definitely not least, the cost to the rider bears no resemblance to the actual cost of ridesharing. Costs are typically 8x-10x the true cost of ridesharing. My "donation" to each of Sidecar and Lyft was $9 for a mile long journey! Whereas the true ridesharing cost would be about $1. Wow!

I think these new services are great. I welcome the innovation and the new models that are emerging. But let's not call them ridesharing services and thus put legitimate ridesharing and vanpool services at risk.

If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.

And Uber, Lyft, Sidecar and other similar apps are clearly taxi services. 

by Richard Bryce (Avego) on Apr 18, 2013 9:11 am • linkreport

Someone bought a condo in my friend's building, who ever it is they renet it out continually on Airbnb (fond it listed there with a description of all the bars in the area). So securtiy code to enter building emailed to half a dozen strangers each month. Since it is near one of the universities, at least once a month a bunch of college kids rent it for a party when their friends are in town. Who's going to end up footing the bill when some drunk coolege kid falls down and hurts themselves in the common area/ hall way? The need for regulation on things like this is to stop the 5% of the people from abusing it. What really is anoying is that the 5% inflict the damage on those NOT getting the benefit of whatever it is they are abusing.

by JJ on Apr 19, 2013 11:57 am • linkreport

@JJ
There already are regulations about that sort of thing. Call DCRA on the neighbor if their use of AirBNB is a nuisance.

by MLD on Apr 19, 2013 11:59 am • linkreport

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Try Mylk, the new sharing platform that allows friends to come together to share milk and milk-like substances!

TERMS OF SERVICE: Mylk does not represent its product as actual milk. You and those you share Mylk with accept all risks of the transaction including obesity, weight loss, heart palpitations, sudden death, slow death, and death from radiation poisoning. For a full list, see mylk.me/terms.

by Mylk on Apr 22, 2013 1:28 am • linkreport

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