Uber, a popular ride-sharing service, launched in Fayetteville on Thursday as part of a rollout in 22 college towns across the country.
The fast-growing start-up uses smartphones to connect drivers to people who need rides as an alternative to calling a traditional taxi service. To celebrate, the company is offering a free UberX ride promotion for new and existing users through Sept. 1.
The company, and its main competitor Lyft, have gained popularity with consumers in places where it’s difficult to hail a cab, but they’ve also been the subject of controversy amongst taxi companies and local municipalities.
Aside from frustrating taxi drivers who are sometimes undercut on pricing by Uber drivers, the companies could also be violating some local taxicab laws.
Local taxicab laws
In Fayetteville, taxi companies must first obtain a certificate of public convenience and necessity before going into business. That process is extensive and requires: an annual taxicab permit; state-authorized liability insurance; a radio dispatch system; vehicle inspections; and eventually, a public hearing and final approval from the City Council. Drivers themselves must obtain an individual permit, submit to a police background check, and install a sign with the word “taxicab” or “taxi” on the roof of their vehicle.
“Uber hasn’t done any of that,” said Fayetteville City Attorney Kit Williams.
Williams said he sent a letter to both Uber and Lyft to notify the companies about Fayetteville’s taxicab laws after hearing that Uber might be planning to launch its service here earlier this year. He said Little Rock City Attorney Tom Carpenter sent a similar letters.
“They never responded to my letters,” said Williams.
Uber and Lyft have emphasized that they are not transportation companies, instead calling themselves “ride-share” services and “taxi alternatives,” but Williams isn’t convinced.
“I think it’s a taxi service,” said Williams. “People pay money and are then given a ride.”
Regulation and safety
There are several valid reasons for the law, he said, most of which center around safety.
Requiring adequate insurance, background checks, and vehicle inspections guarantees protection for riders, not just the taxi company. And, he said, having the City Council first approve the necessity of another taxicab service is one way to ensure there aren’t so many cabs in town that the companies can’t safely maintain their fleets.
“There is something to be said for not allowing taxicab services to just anybody,” Williams said.
Uber says it’s strongly committed to safety, and that all its drivers are thoroughly screened through a rigorous process that includes a three-step criminal background check. The company also says its no-hailing policy ensures riders stay safe and comfortable wherever they are until a driver arrives. Other safety features of Uber include anonymous ratings from riders, and profiles which allow riders to see their driver’s name, license plate number, photo, and rating before they’re picked up.
According to the company’s website, every Uber product is covered by commercial liability insurance, and that every driver is required to use a vehicle no older than 2004.
Still, that doesn’t necessarily put Uber in compliance with city code.
Williams said enforcement would be up to Fayetteville police, but acknowledged that it would be difficult for an officer to know if an Uber transaction was taking place, especially inside an unmarked vehicle.
“Plus, there is a limit to how many resources can be thrown at this particular issue,” he said. “It certainly can’t be the police department’s number one priority.”
The companies’ problems aren’t just limited to small city regulators.
The legality of the Uber service was questioned in 2012 when it launched in New York City. In June, Miami-Dade County Florida police moved from fining Lyft drivers more than $2,000 per ticket to impounding their vehicles.
Williams said he believes that unless the City Council makes a change to the taxicab laws, both companies will be operating illegally.
Of course, companies like Uber and Lyft with large amounts of venture capitalist money behind them can probably afford to write off fines as just another business expense while they wait for a legal solution.