Sunil Paul, John Zimmer and the Art of the Lie

While Sunil Paul (photo, left) certainly deserves credit for creating the original lies, imaginary factoids and false advertising that helped peddle his product to a misinformed public, it would be remiss of me not to give Lyft President John Zimmer (photo, below) his share of the credit for fraudulent marketing – especially in light of the fact that Zimmer appears to be succeeding where Paul failed.

Indeed, it's hard to draw a precise line where one high-tech shyster starts and the other leaves off. If one of them came up with new scam, the other would soon borrow and use it himself. In the end, they both have imperiled the public with similar bogus claims.

Paul rightly takes the credit for:

• spuriously using the word "rideshare" to describe his faux taxi service.
• falsely calling Sidecar's fares "donations" then blackballing any passenger that didn't donate.
• being among the first to redefine a "sharing community" as being an anonymous group where one person keeps all the profits while others in the community take all the risks and pay all the bills.
• Inspecting vehicles to be used as Sidecars by having the new drivers upload a photo of their vehicle.
• taking the lead in Greenwashing by claiming that putting out thousands of taxicabs with no emission controls would help reduce green house gases.
• creating a smokescreen (deliberate bad pun) by joining numerous environmental organizations to hide the fact that his company was a major polluter.
• telling the local mainstream media's "journalists" that SideCar carried a "Million Dollar Guarantee" so that these dedicated, in-depth "investigators" wouldn't bother to investigate and thus discover that Sidecar actually carried no insurance at all.
• telling his own drivers that they didn't need to carry commercial insurance on their own SideCar vehicles which meant that they would be uninsured in an accident – as of course would their customers. 

John Zimmer aped most of Sunil's spins and added a few twists of his own.

SideCar Bites the Dust

SideCar CEO Sunil Paul (photo) left the vulture capital scene with a significant quote,

"We are the innovation leader in ridesharing ..." said Paul.

What makes this statement significant is that, even while going down the tubes, Paul couldn't turn off his hype machine.

He was not and is not an "innovation leader" in "ridesaharing." Not SideCar nor Lyft nor Uber have had (or have) anything to with "ridesharing" except to use the word for the purposes of double-talk, false advertising and fraud – fields in which Sunil Paul has indeed excelled as an innovator.

Ridesharing Explained

As far as I know the only real ridesharing company in California is 511.org which is a government run non-profit. The dual purpose of 511.org is fight pollution by taking vehicles off the street and allow drivers to save money by sharing the costs of a trip with their riders. In their ads for drivers to use the service, 511.org writes:

“Carpooling (i.e. ridesharing) can save you money by dividing the driving expenses between members of the carpool. You can split the costs evenly between people in the carpool or you can split expenses by how often you rotate driving duties. If everyone drives equally, no money needs to change hands. If you are strictly a passenger, you can pitch in your share for gas and other expenses.”

Contrast this with a SideCar ad for drivers,

"You drive every day. Why not get paid for it? Make extra cash and meet some awesome people by driving with SideCar! ... Some SideCar drivers are earning $22+ per hour.”

The difference between a true "rideshare" company, then, and SideCar is that a rideshare company is a non-profit and SideCar is a for-profit company - or was trying to be. 


Some Advantages of Being a Non-Profit:

• Don't need to pay taxes.
• The numbers of cars wouldn't be regulated.
• Drivers would not need to be vetted.
• Cars wouldn't need commercial insurance.
• No responsibility for the welfare of their driver.
• No responsibility for the welfare of their passengers.
• Sidecar would not need to provide insurance for riders, drivers or vehicles.

Sunil Paul's Attacks on the Legal Definition of a Non-Profit

I was going to just summarize Paul's duplicitous career as high-tech charlatan but the arguments that his lawyers gave in an attempt to expand the definition of "non-profit" at the 2013 California Public Utilities Commission (CPUC) hearing are too rich not share with my gentle readers. Sidecar argued:

• “ ... the ridesharing exemption does not apply if the ‘primary purpose of those persons is to make a ‘profit’ but there is no definition or any guidance on how to interpret the term ‘profit.’”
• “By its enforcement actions and policy, the CPSD (Public Utilities Commission's Consumer Protection Safety Division) has apparently chosen to interpret essential and undefined terms such as “profit” as narrowly as possible. The CPSD’s position is that only “incremental” or “variable” profit (i.e., on a per-trip basis) should be considered; however ... a reasonable and practical construction of profit and a commercial enterprise is the total expenses of operation (i.e., the fixed and variable or aggregate costs). Simply put, there’s no profit where total costs exceed income …”
• "The ridesharing exemption under section 5353(h) provides for “[t]ransportation of persons between home and work locations or of persons having a common work-related trip purpose in a vehicle having a seating capacity of 15 passengers or less…and/or transportation that is “incidental to another purpose of the driver.... It is ... important that the phrase “the purpose of the driver” not be read too narrowly. A focus on driver’s state of mind would be so difficult to discern that it would create uncertainty and be impossible to enforce."
• My Note: Does "Work-related” means driving around while thinking about working? Or, conversely, does "non-profit" mean driving people for pay while thinking about your kids?
• Clarify and ensure reasonable and practical guidance and commercially reasonable interpretations of certain vague and undefined ridesharing terms and phrases including “work-related” and “work locations.”  Such terms and phrases should not be construed narrowly based on outdated historical or traditional principles of an employer-employee relationship and a traditional “9-5” home- work commuting routine. ... Rather, the terms and phrases should be construed for the varied circumstances of the current California labor force and market. The CPSD has narrowly defined these terms through its enforcement policies and actions in a manner that is impracticable and unwarranted (i.e., suggesting that a driver or passenger must be an “employee” of an entity, thereby disqualifying independent contractors, freelancers, or full time moms/caregivers from the “work-related” element of the rideshare exemption).

I'm glad that's clarified.

For more in this vein see: My Reply Comments to the CPUC on Lyft, Sidecar & Willie Brown 

These argument turned out to be too obtuse, arcane and asinine even for the CPUC to swallow. They chose to regulate SideCar, Lyft and Uber anyway. However, in categorizing them as TNCs, the CPUC effectively deregulated them by putting them under the control of the State of California instead of the cities because the state had neither the personal nor the means nor the will to regulate them.

Next: Sunil and the thrill of false advertising.

Note: How the civilized world deals with charlatans who put the public at risk.

Uber’s No-Holds-Barred Expansion Strategy Fizzles in Germany

Who is John Galt? Uber, Lyft, Sidecar & the Culture of Deception

One answer to the above question is that Uber CEO Travis Kalanick thinks he is. Why else would he have t-shirts printed with the Uber "U" asking, "Who is John Galt?"

Kalanick obviously identifies with the hero of Ayn Rand's novel Atlas Shrugged. For those unfamiliar with Rand's philosophy, she sets the innovative genius against a society rife with democrats, communists, unionists, socialists, corrupt politicians, seedy journalists, the overweight, sleazy lawyers, environmentalists and their various shills.

I confess that I was a big fan when I was 19. Naturally, I identified myself as a potential fellow genius but beyond that I was attracted by the integrity of Rand's characters: Galt, Howard Roark from The Fountainhead, and Rand's persona Dagny Taggart. The books were not only about greatness vs mediocrity but truth vs lies.

The Warmth of the "Sharing Community" vs Lyft & Sidecar's Terms of Service

Photo of the aftermath of an uninsured vehicle hitting a motorcycle on Lombard Street.

When people sign up to either drive for or ride with Lyft or Sidecar, they need to download an app. In order to download the apps they need to click a box saying that they agree with the companies' terms. Most people never bother to read the terms (or contracts) to which they are agreeing, and I used to be the same. Any time I needed to agree to anything to download something, I just naturally clicked "yes." 

Lyft  & Sidecar are counting on us to act this way. The terms of both these companies print out to over twenty pages of 12pt type and would be almost impossible to make sense of on a smart phone. Before I wrote 100,000 Uninsured Rides and Counting: Undercover at Lyft and Sidecar, it was very difficult to even find the terms on their websites because they were buried in obscure places. The terms can now be found on the front pages of both sites – near the bottom in very small print.

After coming into contact with Lyft and Sidecar, I now print out whatever terms I may be interested in and read them thoroughly before I agree to anything. I'd like to thank CEO's John Zimmer and Sunil Paul for correcting my overly optimistic views on the natural goodness of human nature. I'm sure my new found skepticism will serve me well in the future.

By way of contrast with a legitimate business; When I signed up to drive for Desoto Cab, Operations Manager Greg Cochran and I went over the contract together, and we both signed off on every clause.

For those of you – especially those of you who ride with, or drive for, one of these illegal taxi services – I'm providing you links to the contracts that you've signed so that you can read them (probably) for the first time. If you haven't, I strongly advise you to do so.

Lyft's Terms

Sidcar's Terms of Service

But before doing so you might want to glance at a recent post about a female Lyft customer who has been stalked by a Lyft driver. To be fair, I should point out that no background check is likely to turn up the fact that somebody is a creep since being a creep isn't illegal - at least not within limits.

However, if a woman would run into the similar behavior in a legal taxicab, she would be able to call both the cab company and 311 in San Francisco, and expect some action to be taken on her behalf. At Lyft & Sidecar, one can expect no help whatsoever.

(To read some highlights from the agreement you may have signed, click below.)

100,000 Uninsured Rides and Counting: In Good Hands with Lyft and Sidecar?

No matter what you may think of insurance companies, they are the best b.s. detectors in contemporary culture - out of necessity. Millions, if not billions, of their dollars depend upon the precise definition of words.

When I applied for positions as a "community driver" at Lyft and Sidecar, representatives of both companies told me that I didn't need commercial insurance because they were "not commercial enterprises." I called ten top rated insurance companies and asked them if they agreed with this statement. Not one of them did.

Progressive and All State would consider insuring my car as a business or commercial risk if I drove for Lyft or Sidecar. Geico, State Farm would not insure the car at all if I did so.

While it's true that auto insurance companies are required to cover a "vehicle used in an ordinary carpool on a ridesharing or cost sharing basis," none of the insurers I spoke with consider what Lyft and Sidecar do as ridesharing.

My Geico representative described ridesharing as "people sharing a ride back and forth to work or to an event or to the same location." The cost of the ride should be shared equally by passengers and driver. If the driver made a profit on the ride, it did not make any difference to her if you called the payment a "fee" or a "voluntary donation." A USAA rep simply said that he would not cover a car if it "transported individuals."

In comments to the California Public Utilities Commission, the Personal Insurance Federation of CA, which represents six of the largest insurance companies in the U.S. and who collectively insure the majority of personal lines auto insurance in California, explained the position of its members on the subject:

"It appears that the industry standard for personal auto insurance ... is to exempt from insurance coverage claims involving vehicles used for transporting passengers for a charge. Thus, in situations where a vehicle is insured as a private vehicle and is used to transport passengers for a fee, no insurance coverage would exist."

 " ... The issue before the CPUC is not ridesharing, but instead using a private passenger vehicle in a livery service. This is clearly NOT covered under a standard policy; if an accident occurs, coverage would NOT exist." (My capitalization.)

In short, the information that Lyft and Sidecar are giving their drivers and customers is false. If the vehicles using their apps do not have business or commercial insurance they are not insured and neither the drivers or the customers are covered if they are hurt in an accident.

What Million Dollar Guarantee?

Journalists have consistently missed the point about Lyft's and Sidecar's lack of insurance. But on September 4, 2012, reporter Zusha Elinson from the online paper, The Bay Citizen, wrote an article contrasting the low limits ($15,000-$30,000) of personal liability insurance to the $1,000,000 liability limits required of San Francisco taxicabs.

On September 6, 2012, Lyft and Sidecar announced that they too would provide their drivers with $1,000,000 liability insurance.


Lyft said that they would carry "excess liability per occurrence with an A++ insurer."

Sidecar offered a guarantee instead of insurance.

"The Guarantee provides for up to $1,000,000 in damages for covered losses in the event of an incident. These payments are subject to certain conditions, limitations and exclusion, the details of which can be found in our Program Terms available from Sidecar upon request."

"The Guarantee is not insurance and should not be considered as a replacement or stand-in for primary automobile insurance. The Guarantee does not cover certain excluded losses."

Both these policies (or whatever they are) would be what are often called umbrella policies because they would go into effect above the limits of the vehicle's existing insurance. If, for instance, an injured party was awarded $100,000, the driver's policy might cover the first $30,000 and the umbrella would cover the remaining $70,000.

Since few, if any, of Lyft and Sidecar's vehicles would actually be covered with "existing insurance" per state law, this raises a few interesting questions:

If a Lyft or Sidecar driver does not have the required commercial insurance and thus has no insurance, would the umbrella, the excess liability or the Guarantee, take effect at all? If they did, the driver would still be responsible for the first $30,000 or so in a bodily injury accident. If the umbrella did not take effect then the driver would be responsible for everything.

Given that people who use their own cars to make extra money aren't likely to have $30,000 handy, both the "excess liability" policy and the "Guarantee" are meaningless PR gimmicks.

Tracking down the Million Dollar Promises

During my three minute interview at Lyft, I asked their rep what A++ insurer provided the policy and if I could get a look at it. She told me with annoyance that no one had ever asked her that question before. I then asked her if she'd read the policy. My question clearly struck her as impertinent. "No," she snapped. "You can get it from the CEO."

This turned out to be a problem because Lyft's Facebook page showed no link to CEO John Zimmer. I did find a Facebook post from a speech he gave on transportation and asked my questions as a comment. When I checked back later, both Zimmer's post and my questions had disappeared.

I then wrote to Lyft and once again asked the name of the insurer and if there were any conditions or exclusions.

The next day I received this response from Lyft Admin:

"We appreciate the time you've taken to explore the Lyft community. We approve drivers through an ongoing assessment of several criteria including customer service orientation. At this time, we are adding you to our wait list and may contact you in the future as the community expands."

I'm still waiting for the name of that A++ insurer.

I found Sidecar's Guarantee on their webpage, clicked a link and asked to see the details of their conditions, limitations and exclusions.

I didn't get answer so I asked the same questions during orientation at Sidecar U three days later. The instructor referred me to Sidecar City Manager Chris Dally who gave me his card and assured me that he could answer my questions.

I called him the next day and asked about the exclusions.

"I'm not too familiar with what exclusion you're talking about," Mr. Dally said.  "... It is a little bit of legal speak in there ... It's pretty standard for terms and agreements and things like that ... The things I point you to are the terms of usage ... We'll let you know ... So I want to make sure you're feeling comfortable and again no driver should be doing this if they feel uncomfortable ..."

I asked if the Guarantee was an insurance policy.

"It's a guarantee," he said.

"Who guarantees it?

"It's a guarantee."

I followed up with an e-mail asking about the exclusions the next day.

Dally wrote back giving me the original support link where I'd started.

I tried it again. This time a guy name Max wrote back, also referring me to the original link and added:

 "I have forwarded this to our legal team to get more information for you regarding the Program Terms. You should hear back from us soon."

I'm still waiting.

Conclusion

The CPUC claims to have looked at Lyft's million dollar insurance policy and signed off on it - whatever that means. But CPUC apparently is not sharing this policy with anyone else at this time. In any case, as I've pointed out above, the policy is meaningless unless Lyft's drivers are already covered by commercial insurance.

The link to Sidecar's million dollar Guarantee can no longer be found on either the Sidecar webpage or their blog. This is appropriate because the "Guarantee" clearly never truly existed in the first place.