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February 10, 2014

Pittsburgh Lyft: Yellow Cabs, White Jitneys, Gray Areas

what happens when a police officer pulls over a Lyft driver in Pittsburgh?

There's a new player in town, and there's a lot of chutzpah around the rollout: New Taxi Service Lyft Set To Go In Pittsburgh (Volunteer Drivers Face Insurance Questions). (Post Gazette, Feb.6 2014)

Another great article was in Pittsburgh City Paper: Bumpy Road Ahead?: At least one ride-share company plans to launch here this week, but how long it will be allowed to operate is another story (CityPaper, Feb 5 2014)

What's Lyft, How's It Work?

This is a pretty neutral description. Customers download a smartphone App that they use Facebook to login to. They tell the App when they want a Lyft. The App notifies the nearest Driver that's available (on-duty). The Driver gets the location, destination, a picture of the customer, and sees the Customer Profile. If the Driver accepts the ride, they click YES.

When a driver accepts the ride, the Customer gets a picture of the driver and sees the Driver Profile and chooses to accept it. When both say YES, the driver comes over and picks the Customer up, in the car with a pink moustache on it. The driver and passenger exchange fist bumps. The passenger sits in the front, and gets to pick the radio station.

At the destination, no money changes hands. The Customer pays through the App, including the tip. The Customer rates the Driver. The Driver rates the Customer.

Sounds Innovative. What's the Problem?

It does sound kicky and fun but there are major issues, mostly like: legality, insurance, liability, definitions, taxes, ADA, race, and class. Things like that. But hey, the moustache is pink!

Lyft is not a taxi company (in spite of the PG headline). They don't have a taxi license. In fact, their website tells you that they're not a transit company. And their drivers are not employees, they're subcontractors which is an important legal and liability distinction.

Since Lyft isn't a taxi company, your driver isn't a taxi driver, and the car isn't a taxi: it's a jitney service. Jitney services are illegal. They've previously existed in mostly poor, black, and immigrant neighborhoods that legal cab companies don't serve. Jitney services face periodic, low-level law enforcement sweeps but they are clearly operating outside of the law. You get in a crash as a jitney passenger, you're not covered by anything.

Lyft is a jitney service for white people, with AEO-dressed drivers. This map shows Lyft's Pittsburgh coverage area and their "hot zones":

What's curious is that Lyft's illegal jitney service has been embraced by government officials in a way that the other (legacy, black-operated) jitneys haven't. In fact, Lyft has been embraced in a way that tax-paying Yellow Cabs hasn't been loved. If I was a Yellow Cab driver, or a Jitney driver, I'd be like WTF?

A few quotes from grown-ups who aren't paid by Lyft:

  • Rosanne Placey, spokeswoman for the Pennsylvania Insurance Department: "Once you start using your vehicle for business, it's considered commercial, so you need a commercial policy or an add-on to your personal policy."
  • Jennifer Kocher, spokeswoman for the Pennsylvania Public Utility Commission: "If the driver is receiving compensation, they are supposed to have a commercial license." she said. And, drivers who are found operating a commercial vehicle without a commercial license could face criminal charges, she added.

Why Pittsburgh and not Philadelphia? As a matter of fact, the CityPaper article talks about Sidecar launching a ride-share service in 2013 in the City of Brotherly Love, and maybe that's what Lyft is in Pittsburgh:

But when Sidecar launched its own ride-sharing service there last year, it was promptly shut down. "When we became aware of them operating, we conducted a sting operation," says James Ney, director of the Taxicab and Limousine Division of the Philadelphia Parking Authority. "We issued stiff citations and impounded the vehicles." Ney says Sidecar was fined for dispatching without a license; Sidecar drivers were charged with operating unauthorized taxis.

We have laws and regulations for reasons. They evolved out of a need to protect people. There are insurance, training, testing and licensing requirements for carrying passengers for money.

It's not an innovative business model to say, We're going to skirt the laws, we're going to hide behind a facade, and we're going to put young people at risk because they will have to cover their passengers - even though we know their insurance won't. That's why they're subcontractors and not employees. Lyft makes more money that way.

Cynical misrepresentation isn't business innovation.

Embracing companies that put the public at risk isn't responsible government.

It's all fun till somebody gets hurt.

21 comments:

BrianTH said...

"We have laws and regulations for reasons. They evolved out of a need to protect people."

Unfortunately, sometimes they also evolve out of a desire to protect monopolists/cartels, with the effect of raising prices, reducing quality, and restricting output of the relevant goods or services. That doesn't mean a completely lawless approach to services like Lyft is a great idea, but one shouldn't assume that insisting on full compliance with the existing regulatory structure is the right approach either.

Bram Reichbaum said...

I've never heard a Pittsburgh official suggest, "We need to get rid of these jitneys," of which Pittsburgh visibly has so many. Isn't it fair to say "legacy" jitneys are being tacitly embraced by local officials also? This is my main confusion and interest in the issue, I don't see the alleged hypocrisy.

I cannot argue the points about legality and liability. I might suggest the genesis of some laws claiming to protect people are actually to grant and then exploit monopoly privileges (I haven't been specially trained to drive passengers, yet I do so frequently and knock wood, I've never hurt anyone!) and that adults can and do assess their own tolerance for financial risk all the time. But be that as it may it's a legitimately thorny issue on that end, and it is unusual to see public officials seemingly blasé about the letter of the law.

Fauna Violet said...

I tried to rely on YellowCab this past year and getting a car was nearly impossible. I welcome anything to the city to help people get around! Not to mention the cost is much more reasonable!

Vannevar said...

Fauna, does the increased ease of use and lower cost balance with it being an uninsured, illegal ride? So if G^d forbid there's an accident, Lyft doesn't pay, the driver's insurance doesn't pay (because it's a commercial operation), the driver goes bankrupt, you need a string of operations and can't afford them?

Is there an incongruity (I'd like to ask) between moving the nation into near-universal health insurance, while moving our cities into un-insured jitney transit?

Vannevar said...

Hello BrianTH, I'm completely willing to concur that taxi regulations may be manipulated for the advantage of incumbents, I think anybody would have to concede that. And I'm good with changing the game, I'm not invested in the status quo. My concern is: you don't change the field by putting people in cars and driving them around without coverage, without clear legal status, and by (at best) ambiguous definitions. Change the laws, spend the money, get the paperwork done and then start driving people around: great! But don't start carrying passengers in kids cars, when the state says it's not legal, and presenting your business as something it's not.

One or two poor souls are going to get jammed up in a crash, and they'll be the unfortunates who focus the problems with allowing Lyft to operate in this half-truth, wink wink nudge nudge operation. That's my concern. I'm not obsessively fond of rule-following for it's own sake.

Anonymous said...

To start, you probably shouldn't use a photoshopped picture to head your article.

Also you're making pretty broad statements about the insurance and how nothing will be covered. Have you read Lyft's insurance plan? Can you show proof that when there's a passenger in the car that nothing will be covered?

I'm just reading a lot of puff with no proof. I'm trying to read up on it as a curious potential driver and passenger, but I'm not seeing a lot of solid arguments from either side. I'm genuinely interested in this.

Thank you.

Vannevar said...

Hello Anony12:37,

The point about insurance is driven by multiple quotes from insurance agents. Here's some good reading: http://phantomcabdriverphites.blogspot.com/2013/02/100000-uninsured-rides-and-counting-in.html

I have read Lyft's website press release about supplemental insurance plan. It's very vague.
Here's the thing about insurance: you don't show proof of non-insurance, you show "proof of insurance". There's no proof of insurance for Lyft passengers and without that, it's not covered or safe.

Lyft says it's not a taxi company, and not a transport company, so why would they have passenger insurance? They're trapped in their own little bit of dialectic.

Having said all that: if they would get the insurance right, and get a govt official to declare this as a legal transpo option, I'm all for this, I think it would be great. But until that happens, they're putting their drivers and customers at risk. Kind of interesting that Philly shut Sidecar down hard and fast, even impounding vehicles.

Colleen Spiegler said...

I have to agree with FV, In my experience, 'legitimate' (AKA: MONOPOLY) taxis are expensive and the service is lousy or non-existent. The times I've used jitneys, they were efficient, courteous and not cost prohibitive. As a consumer, I'll choose/take my chances with the service that actually shows up when I request them, aren't a jerk to me and rip me off.

Colleen Spiegler said...

If anything, I hope the advent of Lyft brings to light the atrocious 'service' that Yellow Cab provides. If two white women can't get a cab to take them someplace, what luck does a brown-skinned person have trying to get home at 3AM?

Bram Reichbaum said...

You referred to this as a "wink-wink, nudge-nudge" operation. That it is.

As an occasional activist I've come to be surprised how many campaigns and protests rely on "wink wink, nudge nudge" activities. Claim that "I'm only here in the lobby because of this." Or, "Let's go out into the street and block traffic (maybe ambulances, someone could die!) but let's tell the Mayor and Police Chief first that we're doing it so that they'll let us." Telling the emperor "I am Spartacus", when you are not. It seems to me that part of what is driving the "demand" (or enthusiasm) for Lyft / Uber / etc is: we don't like the cab monopoly. In Pittsburgh, we also don't happen to like the state of cab service at all, but in general there is a strong sense that we'd like to bust up that rigid system that's not working, and take care of it ourselves immediately, physically. Yellow cab may have a public license, but it is a private company operating for profit. Why not democratize that?

And you're very correct, the proper thing to do is to lobby and to change the laws. That can be EXCEEDINGLY tough in Harrisburg, especially when there are entrenched interests involved. This might be a way to build evident support for democratization of the marketplace, until strict licensure becomes absurd. A way for local law enforcement, politicians and leaders to signal, "We have much better things to worry about, than some people are scraping some money together in this economy and on their own schedule, without a "boss" looming over them, driving hipsters, eccentrics and other adventurous types around." And that is another way to organize change, the "just do it" way. It might not be the suffrage movement, but it's people responding to their conditions.

It should be made clear to the drivers what the risks are. It should be clear to the passengers, they do this at their own risk. That can be tricky to do when you're engaged in a wink-nudge political campaign, but drivers and passengers need to know the truth. If those things aren't made clear, that's bad and shame on Lyft. If Lyft keeps it up, the folks in Pittsburgh interested in "rideshare" ought to check out Uber and the other one.

Vannevar said...

And so we come to Definitions. RIDESHARE is something you see where people with cars will pick up total strangers in informal carpools, for no money at all, for reasons such as HOV lane access. Lyft isn't RideShare; it's for-profit passenger carrying.

Maybe a useful metaphor (or analogy?) is sex: casual hookups are great, what consenting adults do is strictly their own business, and gov't has no role in it -- but when money starts changing hands it gets very complex very fast, and with public safety on the line perhaps politicians should not be welcoming new business models without knowing if it's legal or not -- because people get hurt in cars, and people get hurt by cars. And wink, wink, nudge, nudge doesn't have any place in a situation where (statistically) people are going to get hurt.

But I do agree that if Lyft were transparent about the risks then it would be a different matter, and I'd be much more sanguine about what they're doing. I'd like to see somebody from the State Insurance offices give an official view on what Lyft is doing, I'd like to hear one or two insurance companies say that their customers are covered as Lyft drivers, and then it looks different. None of those are happening.

BrianTH said...

"Change the laws, spend the money, get the paperwork done and then start driving people around: great!"

Unfortunately, changing anti-competitive laws and regulations is often easier said than done. The incumbents will throw lobbyists, contributions, and other political assets against such changes, all funded by the excessive profits the anti-competitive scheme allows. The real beneficiaries would be the public, but their interests are usually diffuse and ill-represented.

Again, I'm not saying the lawless approach is ideal, but it is a far harder call than the original blog post suggests, particularly given a realistic assessment of the political process. I also think it is not convincing to simply imagine disaster scenarios in which there is an accident and inadequate insurance. That's a real concern, but so is the fact that so many people have restricted mobility and the existing taxi service is expensive and unreliability. Those people are being harmed on a regular basis.

Or if you prefer hypothetical, emotion-laden, anecdotes--what should we say to the family of the person killed by a drunk driver who could have been saved if we allowed Lyft? Sure, if he had used Lyft instead, and if that Lyft driver got into an accident, maybe there would have been an insurance problem afterwards. But do you really think that family would not prefer to take their chances on an under-insured Lyft driver rather than having him just drive home drunk?

Vannevar said...

Hello BrianTH, I mostly agree, I think - what I don't like about Lyft's lawless approach is, they've moved the risk to others while taking the profits for themselves, which is shameful. If they took the risk and the profits themselves, then Bravo Lyft!

And you're also right that there are people damaged consistently by the absence of proper transport. Where I'd personally go from that is that instead of letting rent-seekers profit by cherry-picking profitable routes from profitable clients, I'd want instead to see comprehensive public transport.

Comprehensive public transport would include the poor, people who aren't on Facebook, people who don't have smart phones with data plans, people who are in wheelchairs, people with small children (Lyft doesn't have childseats, neither do taxis). There is a public need, you're quite right, and my own response (don't want to put my words into your premise) is that there's a public solution: public transit.

Public transit that's frequent, scheduled, subsidized (like all our other transport is), insured, accountable, ADA-accessible, and covers all neighborhoods. That's what Pittsburgh needs. (this was going to be my next blog post!) Cheers, V.

GeneW said...

I'd think that anyone who wants Pittsburgh to be accessible without having to own a car would welcome anything that breaks the monopoly of Yellow Cab. My wife doesn't drive and usually takes PAT but often needs to travel around the city on business and Yellow Cab is totally useless as a mode of transport. I'm not saying that Lyft is the solution to this problem but something's got to change.

BrianTH said...

"they've moved the risk to others while taking the profits for themselves, which is shameful."

I'm not entirely sure how their entire system works, but from what has been reported this seems a bit misleading. You are talking about a risk of accidents and such, which primarily is in fact a risk generated by the actual drivers and owners of the vehicles. Lyft as a broker of such relationships does generate some risk itself, but that is more in the form of possible frauds, payment problems, data security, and so on. Of course Lyft's take of the "profits" from the entire venture should reflect the limits of the role they are actually playing, but offhand I don't know that they don't. Certainly if this becomes a competitive industry, that is precisely what I would expect to see happen (reliable, safe driver-owners with good records should be able to negotiate down the fees paid to the app-provider/broker, since the marginal costs of doing that part of the business are probably pretty low).

"Where I'd personally go from that is that instead of letting rent-seekers profit by cherry-picking profitable routes from profitable clients, I'd want instead to see comprehensive public transport."

While an independently worthy goal, I'm not aware of a public transportation system in any major city anywhere in the world that is truly comprehensive in that in can fill every transportation need by non-drivers. There are always going to be holes, and while eventually self-driving cars may fill those holes cheaply and safely, for now that technology is not available for mass use.

Moreover, obviously our existing public transportation system in Pittsburgh is nowhere close to what it could be even subject to those inherent constraints. Unfortunately, the political situation at the state and federal levels is currently anti-transit-investment, and even if we got started in earnest right now, it would still take many years, possibly decades, of sustained effort for Pittsburgh to approach international developed-country standards for urban public transportation.

So what are we going to do in the immediate future? The technologies and transportation systems of the future (knock on wood) are of no use to the people who need transportation today. So if you are considering a new system that is ready to roll out right now, you have to do more than suggest an alternative that will take a long time to materialize.

Vannevar said...

BrianTH, I'd say that in "brokering connections" between paying passengers and drivers that are not qualified or insured to carry paying passengers, they are a negligent broker operating in bad faith, and they are mis-representing the transaction they purport to deliver. That's the risk they misrepresent.

BrianTH said...

"I'd say that in 'brokering connections' between paying passengers and drivers that are not qualified or insured to carry paying passengers, they are a negligent broker operating in bad faith, and they are mis-representing the transaction they purport to deliver."

Well, they are not necessarily misrepresenting the transaction if they don't claim to be verifying the licensing or insuring of the drivers.

But even if they did play that role, it would still be a pretty minor part of the overall value of the service. Imagine we do in fact create a legal/regulatory regime in which it is not difficult for qualified drivers to get the necessary license and insurance, and all the app-provider/broker does is warrant to the users that they have verified that the listed drivers have done that (saying by checking an online database provided by the relevant regulatory bodies). Imagine also there are multiple services like that competing to pair up drivers and riders. The app-provided/broker is not going to get much of the profits just providing that sort of service, since it shouldn't cost all that much to do.

Honestly, I think there is some odd thinking about these services that comes out of the monopolies and cartels that currently dominate taxi service in many places. If you think of this more like a Yelp/Urbanspoon/TripAdvisor/etc.-type service, then I don't think you should be thinking in terms of huge profits, at least not once it becomes a competitive industry.

AaronC said...

Sure, let's just press one button and instantly have great public transit available, 24/7, in all areas of the city. It's that easy, right Vannevar?

In the meantime, I welcome this instant solution to remove a huge amount of drunk drivers from the streets while we work towards that TWENTY YEAR GOAL of having public transit like that.

Anat said...

Uber out

Anat said...

About time to get uber out

v_hawks said...

Below is an excerpt from Lyft.com about their insurance policy & can be found at :-
https://www.lyft.com/drive/faq?article=1229170

HOW DOES OUR INSURANCE POLICY WORK?


The subject of insurance can be a complicated one, but it's important you know how and when our policies cover you and your passengers in the event of an incident. Here's an overview of how our insurance policies work:

What coverages do our policies include?

There are four coverages included in our insurance policies:

Contingent Liability (coverage while in driver mode waiting for a ride request)
Excess Liability
Contingent Comprehensive & Collision
Excess Uninsured/Underinsured Motorist (UM/UIM) — Bodily Injury
How does contingent liability coverage work?

Our contingent liability coverage is designed to provide coverage to you and third parties while in driver mode before you've received a ride request in the event your personal insurance does not respond. The policy has a $50,000 maximum per person, $100,000 maximum per accident, and a $25,000 maximum for physical damage to another vehicle. There is no deductible under this policy.

How does excess liability coverage work?

Our excess liability coverage is designed to provide coverage (once you have accepted a ride request and are transporting a passenger) both in the event your personal insurance does not respond, or if your personal insurance only covers a portion of your liability associated with an incident. It's designed to cover your liability for property damage and bodily injury of passengers and/or third parties up to a limit of $1M per incident. There is no deductible on liability claims.

How does contingent collision coverage work?

Our contingent collision coverage is designed to cover physical damage to your vehicle resulting from an accident as long as you have obtained collision coverage on your personal automobile policy. The policy has a $2,500 deductible and a $50,000 maximum for physical damage to your vehicle. Like any driver's personal auto policy, this policy is designed to step in regardless of whether or not you're at fault. This policy will respond if your personal auto policy declines the claim for collision damages to your vehicle solely because you are driving for Lyft.

How does contingent comprehensive coverage work?

Similar to our contingent collision coverage, our contingent comprehensive coverage is designed to cover physical damage to your vehicle resulting from a non-collision event (for example a fire, vandalism, a natural disaster, etc.) as long as you have obtained comprehensive coverage on your personal automobile policy. The policy has a $2,500 deductible and a $50,000 maximum for physical damage to your vehicle. Like any driver's personal auto policy, this policy is designed to step in regardless of whether or not you're at fault. This policy will also respond if your personal auto policy declines the claim for comprehensive damages to your vehicle solely because you are driving for Lyft.

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