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New York Threatens to Fine Car Service $2,000 for Giving Free Rides

9:01 AM, Jul 11, 2014 • By ELI LEHRER
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As anyone who has visited New York City knows, getting a taxicab in the city can prove very, very difficult. And finding a driver that speaks English, has working air conditioning, will let a visitor pay by credit card, and knows directions to major landmarks can be even harder. That’s why it’s utterly bizarre that the city is trying to stop drivers from offering taxi-like rides in the city for free.

The underlying cause of the cab shortage, of course, is the city’s antiquated system of taxi medallions that limits a city of 8.4 million people and few parking spaces to about 13,000 cabs—about 4,000 fewer than existed in in 1937 when the city had a million fewer residents.

To their credit, the city’s elected leaders have moved to remedy that situation by slightly increasing the supply of medallions, creating new, green-colored taxis to serve outlying areas, and letting Uber, a trendy company best known for its high-end “black car service,” operate. (Albeit with constant bureaucratic meddling.)

But the city’s bureaucratic mandarins don’t seem to want to allow their subjects too many new options. Exhibit A is their treatment of a newcomer to the market, the San Francisco-based company called Lyft, which puts giant pink mustaches on the front of its cars and encourages drivers and fares to fist-bump. The company, scheduled to debut in taxi starved Brooklyn and Queens on July 12, was planning to offer its services for free to build market share during its first two weeks in operation.

The city’s response: If drivers so much as dare to give people free rides, they’ll face $2,000 fines and might have their cars impounded if they, say, fail a spot engine emissions check. Given that Lyft, and its competitors (Uber’s UberX service and Sidecar) largely rely on people driving their personal cars, this is a draconian penalty to say the least. Indeed, there really doesn’t seem to be a limiting principle that would stop the city from applying the same logic to people who give rides to friends. After all, they’re competing with taxis too.

The city does, of course, have some legitimate interest in overseeing the safety of companies that offer rides for money. But, given that Lyft, Uber, Sidecar, and some smaller players have all already compiled better-than-taxis safety records in dozens of markets where they already operate, it’s difficult to figure out why the process should be complicated or involved. In the end, if a private company wants to offer the city’s resident something for free, the bureaucrats really need to think about getting out of the way.

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