Tuesday, February 5, 2013

100,000 Uninsured Rides and Counting: If it looks like a duck and walks like a duck, will it bark if you call it a dog?

"The great enemy of clear language is insincerity," George Orwell.

Both Lyft and Sidcar have founded their businesses on the deliberate misuse and perversion of ordinary words. To understand how this works, first look at what the companies are actually doing, then look at what they say they are doing.

A passenger used a Lyft or Sidecar app to hail a driver. The driver accepts the ride, picks the person up and drives him or her to a location. The passenger pays a fee based on time and distance.  The driver gets paid 80% of the fee and the company keeps 20%. Both the company and the driver make a profit from the transactions.

In all fundamental ways, then, the services that Lyft and Sidecar provide work exactly like a taxicab, except for the fact that San Francisco taxis are legal, the drivers are trained and their vehicles are insured.

Lyft and Sidecar, however, claim that by calling customer's payment a "voluntary donation," a driver a "community driver" and a customer "member of the Lyft or Sidecar community" the experience is somehow legally different. But, what really changes? Nothing. As Tech Crunch writer Ryan Lawler put it in an article on Lyft,

"... the drivers aren't licensed ... and some would argue that the service isn't legal at all. It circumvents that with the 'donation' bit, but there's a kind of an understanding that if you don't give a donation you'll be rated poorly and maybe you'll have a hard time getting rides in the future."

Chris, the Lyft representative who interviewed me for a driving position, assured me that only one passenger in twenty thousand fails to pay. He added that, if a passenger didn't pay, Lyft drivers would never have to pick that person up again. A friend of mine tested the voluntary nature of the donation and did not pay two different Lyft drivers. Now she can no longer get a ride if she uses Lyft's app to hail one of their illegal cabs.

During a driver orientation at "Sidecar U," the instructor told me that more than 99% of all customers "donate." If they don't, Sidecar calls them up to ask, "What Happened?" Sort of like donating to the mafia, no?"

The instructor at Sidecar U also presented an arcane standard for profitability. She argued that the driver using their app is not considered to have made a profit until his or her car has covered the costs of one year’s worth of gas, maintenance and depreciation. Since every car and driver is different, this standard would be hard, if not impossible, to apply uniformly. The costs would increase with usage so the more drivers worked, the longer it would take to cover their car’s expenses. Does this means that the more they worked, the less they would make? I didn’t quite get it myself.

In order to avoid regulations, Sidecar and Lyft claim that their drivers are not their drivers and, in any case, their drivers don’t make a profit—despite the fact that making a profit is the very reason why people are turning their personal cars into taxis. 

Both companies even advertise that you can make money driving for them.

The Sidecar website says, “Make money with your car. Sidecar lets verified drivers make money giving people rides around town.” A Lyft ad says, “Make $22/hr and have fun driving your own car in SF.”

Politicians call this “wink wink nudge nudge.” Everybody knows that both companies and their drivers are making a profit. Everybody knows that the donation is a fare that needs to be paid. Everybody understands that the companies are speaking with forked tongues in order to circumvent taxicab and insurance regulations. The Lyft and Sidecar communities think this is awesome. All they are doing is breaking a few antiquated rules. It may be too bad for a few old-school cab drivers but it’s really cool for everyone else.

Or is it?


  1. The end is near. Taxi companies are almost obsolete as the big money smells blood in the water and closes in for the kill. Hailo just raised $50,000,000 to go head to head with Uber. Backed by Sir Richard Branson from Virgin and Tom Barr, the former head of Starbucks. Now that the taxi industries have fallen faster than the French in World War Two, the new Alpha males on the block are battling it out between themselves for future supremacy.

    I don't think the SFMTA and it's city attorneys have a chance against these well funded machines. That would be if they were even doing anything to resist it! Very sad for all the people who really cared about and fought to keep the taxi business clean and responsible in San Francisco.

    Read and ponder our future.


  2. Hailo works fine with the cab industry, and even includes additional features useful for drivers. Maybe they'll become the global standard and wipe Uber and the rest off the map.

  3. If they are refusing service to those who don't "donate" then theirs is NOT a "donation" basis.

    Perhaps the companies assume they will be long gone before the IRS catches up with them. None of their excuses will be allowed by the IRS.

    It is becoming clear that people who play by the rules are punished for it.

    Christopher Fulkerson, Ph.D.

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