Corrupt State Index: Virginia DMV Orders Uber And Lyft To Stop Operating Immediately

from the total-failures dept

Earlier this year, we noted that it was a pretty clear indicator of state or city corruption when those local governments figured out ways to ban innovative new upstarts, like Tesla, Uber or AirBnB. The latest state to jump up the corruption index, then, is Virginia. The Virginia DMV has told Uber and Lyft to stop operating immediately.
Virginia’s Department of Motor Vehicles sent cease and desist orders today to Lyft and Uber, telling the two ride services that they must stop operating in violation of state law or face fines against their part-time drivers.

The DMV had already issued civil penalties against the companies in April -- $26,000 for Uber and $9,000 for Lyft -- for trips that their drivers provided in Virginia despite warnings by the state agency that Virginia law does not allow their business model.
This is silly. Uber and Lyft (and others) have been shown to provide some great and convenient services pretty much everywhere else. And almost every attempt to block them seems to really be about keeping such transportation options more limited to limit supply and competition, allowing existing taxi companies to charge more (while being less convenient).

Reader Comments (rss)

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  1.  
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    Anonymous Coward, Jun 5th, 2014 @ 3:26pm

    If you have ever tried to use a regular cab in these places you would understand why they fear any competition.

     

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  2.  
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    Anonymous Coward, Jun 5th, 2014 @ 3:29pm

    The linked article states (my added *):

    "The DMV is studying Virginia’s motor carrier laws with an eye toward legislative changes next year that *could allow Lyft and Uber to legally operate in the state*. Secretary of Transportation Aubrey Layne said last week that *he liked the companies’ business models, but until the law is changed, they are violating it*.

    Despite the fines and the DMV’s entreaties to the ride services to work on the study and legislative changes, Lyft and Uber have continued to provide services in Virginia. ..

    In the cease and desist letters, DMV Commissioner Richard Holcomb told representatives for both companies that he is “once again making clear” that they must *stop operating in Virginia until they get the proper authority*.

    Holcomb wrote that he “strongly” suggested the companies *focus their resources on participating in the state study* “rather than continue illegal operations in the meantime.”

    Which would seem to contradict "almost every attempt to block them seems to really be about keeping such transportation options more limited".

    Of course time will tell, but it seems clear the state is open to the business model but while it is against state law then they clearly can't condone breaking the law and they must enforce the law as it now stands. What else would you expect them to say? Seems TFA is hyperventilating unnecessarily. How about reconvening when they fail to modify the law?

     

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  3.  
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    Jay Fude (profile), Jun 5th, 2014 @ 3:35pm

    Is this...

    Is this yet another case of Felony Interference with a Business Model?

    Seems like Uber and Lyft are facing the same battles that others are fighting against the big studios. Interesting how hard the buggy whip manufacturers fight against the flying cars.

     

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  4.  
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    Shakil Ahmed, Jun 5th, 2014 @ 3:36pm

    Finley law is implemented today is the day of joy for every citizen who respect the the law of this country iam so haapy

     

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  5.  
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    charliebrown (profile), Jun 5th, 2014 @ 3:45pm

    Taxi Fees

    I don't know about America but the situation in Australia is that taxi drivers have to hold a taxi driver's license, the car has to be registered as a taxi (with signage, I assume) and all public liability insurance paid up. When you break it down, with fuel, it can cost $150 per day to run a fully licensed taxi car. That's just one vehicle.

    The state government determines the amount that is charged by each taxi car. The amount usually goes up by a fewq cents per year. It is currently around AU$2 per kilometre (roughly AU$3.30 per mile). I do not know how much the state government gets in fees and charges from the taxi's owner but I assume they take some.

    So far Uber is ssetting up in Australia and taxi drivers are concerned that they'll loose fares and thus money. They won't loose it all because people often take taxis on a whim and you can't use Uber for that. But so far the government hasn't said a thing. Either that or the Australian media doesn't care. Sometimes it is hard to tell the difference. I say give it time.

     

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  6.  
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    John Fenderson (profile), Jun 5th, 2014 @ 3:58pm

    Re: Taxi Fees

    I think there's a fundamental difference between taxis (who hang out on the street and get hired by people flagging them down) and hired cars (who have to call ahead). The former has a larger risk of consumer harm than the latter.

     

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  7.  
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    Redtop driver, Jun 5th, 2014 @ 4:41pm

    Redtop and Blue top working hard to limit app based companies

    In Northern VA, a company called transportation inc also trading as Redtop, yellow and diamond has monopolized the entire taxi industry. This company has a lot of power on decisions made regarding any transportation. Th company want to keep its business. Since the coming of Uber and Lyft, this company has lost the market and all it's former drivers are driving for uber and lyft. It is not about public safety. It is all about corruption an protecting the fat guys.

     

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  8.  
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    That One Guy (profile), Jun 5th, 2014 @ 5:23pm

    Re:

    It could be my cynicism popping up, but 're-evaluating' the situation sounds like a great way to stop Uber/Lyft from doing anything, allows the state government to stall as long as possible, then when pressed they can claim that since things are going fine without services like Uber and Lyft, there's no need to change any laws.

    Now, if the politicians involved are serious about being willing to change the laws to allow service like Uber/Lyft to work, and not just make it so the laws make their business models incapable of competing, that's great, but at the same time, it only reached that point because Uber/Lyft were already active there, had they not been, the odds of anything changing would likely have been very slim.

     

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  9.  
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    Anonymous Coward, Jun 5th, 2014 @ 5:26pm

    Ride Sharing

    http://www.dcr.virginia.gov/virginia_naturally/comed-25-ways-to-help-virginias-environment.shtml

    25 Ways to Help Virginia's Environment

    Be a smart driver.
    Keep your car tuned and its pollution control equipment working properly. Combine shopping with other errands to avoid unnecessary car trips. Also, encourage your employer to participate in a regional ride-sharing program.

    http://www.drpt.virginia.gov/locator/allproviders.aspx?type=1

    This VA Gov. site has numerious ads for ride sharing.

    http://www.drpt.virginia.gov/activities/files/Hampton%20Roads%20Coordination%20Plan%20(PDC%2 023).pdf

    page 9
    HAMPTON ROADS AREA
    PUBLIC TRANSIT –
    HUMAN SERVICES TRANSPORTATION
    COORDINATED PLAN

    Key strategies that have been identified for the Hampton Roads area, both for the urbanized area and for rural communities under the jurisdiction of DRPT for funding,
    include, but are not limited to:

    ...
    · Improve reciprocal agreements and ordinances for use of accessible taxicabs
    · Focus on shared-ride services

    http://www.virginiadot.org/travel/faq-rideshare.asp

    The Virginia Dept. of Transportation has site for Virginia Rideshare Agencies.

     

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  10.  
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    Anonymous Coward, Jun 5th, 2014 @ 6:38pm

    Eliminating taxi cab monopolies would improve safety and reduce drunk driving

    https://www.techdirt.com/articles/20110426/14571614044/administration-bangs-drum-support-need less-protectionism-world-ip-day.shtml#c224

    Not to mention that taxicab monopolies likely harm the environment because taxicab companies have incentive to keep their cars as fuel efficient as possible to save money (and perhaps to have their own in-house repair shops or to contract in bulk where repairs that increase efficiency are done routinely in opposed to paying on a per repair basis, ensuring their tires are properly inflated and that they're using tires that save fuel, their car is properly oiled, etc...) and to do whatever they can to provide the most transportation using the least amount of fuel (ie: by carpooling and planning their routs to maximize carpooling). It's much easier and more efficient for a company that specializes in cars to deal with cars than it is to force a much larger population to deal with them many of which are car illiterate.

    Not to mention having more taxi-cabs creates efficiencies in that fewer cars can be used to serve more people and fewer cars require less parking space and less parking space is more space that can be used to build buildings and roads and improve congestion (more roads and fewer cars = less congestion).

    Another thing that's bad for the economy are these toll lanes. Hypothetically speaking lets assume we have two uniform lanes and the average speed on each is 30 miles per hour. Now lets say one of those lanes turns into a toll lane and its average speed shoots up to 45 miles per hour. Assuming the same number of vehicles and assuming that miles per hour has a linear relationship with speed the other lane may now be reduced to 15 miles per hour (if you have fewer drivers as a result the reduction in the number of drivers is a loss in utility).

    Now the utility gained to those driving in the fast lane is 15 miles per hour (30 Mph original speed if fast lanes don't exist + 15 miles per hour extra speed). But what they're willing to pay is an extra 30 MPH of utility (the difference between the toll lane and the regular lanes which are now 15 MPH). So the toll lanes only benefit those that use it that are willing to pay what they are paying at 45 miles per hour had the regular lane been moving 30 miles an hour (and not 15) and it only helps them during the specific times that they are using the toll lanes and are willing to pay what they are paying for those extra 15 miles an hour. It otherwise hurts them and it hurts them during the times that they aren't using the toll lanes and are using the regular lanes instead. In the meantime everyone else that's not using the toll lanes is hurt because they are being forced to travel at a slower speed.

    tl/dr: if you draw the economic curves toll lanes almost certainly result in a deadweight loss in social utility.

     

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  11.  
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    Anonymous Coward, Jun 5th, 2014 @ 10:57pm

    Re:

    "Of course time will tell, but it seems clear the state is open to the business model but while it is against state law then they clearly can't condone breaking the law and they must enforce the law as it now stands."

    The law as it now stands is a result of corruption and every day that it goes by unfixed is also a result of corruption. The government has no business passing and maintaining monopolies just to grease the palms of politicians.

     

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  12.  
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    Anonymous Coward, Jun 6th, 2014 @ 3:09am

    perhaps seeing which members in the Virginia DMV have recently had a 'windfall' to their bank accounts, may put some light on to the reasons for this ridiculous notice of termination?

     

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  13.  
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    Jake, Jun 6th, 2014 @ 5:24am

    Point of clarification: Does the state of Virginia recognise a distinction between town-car services and livery cabs? If you don't use taxis regularly, the difference is that town-car services can only be pre-booked by arrangement while livery cabs can pick up fares ad hoc from the street.

    If so, Lyft and Uber are basically town-car services. That means they've got to fulfill certain statutory obligations -vetting drivers, liability insurance and so on- but it sure as hell doesn't make their business model illegal.

     

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  14.  
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    The Wanderer (profile), Jun 6th, 2014 @ 5:26am

    Declaring a business model illegal seems just ludicrous to me. A product or service, yes, but an entire business model is quite another matter.

    Do we have any other example, in the entirety of US history, of a case where a business model - rather than a product or service - has been declared illegal under US law?

    I suppose arguably "protection" (i.e. "nice shop you've got here, be a shame if something were to happen to it") and "monopoly" could be described as business models, and those are theoretically illegal... but that idea still seems to be lacking something, somehow.

     

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  15.  
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    Anonymous Coward, Jun 6th, 2014 @ 5:59am

    Re:

    It depends what you mean by 'business model.' I think it could reasonably argued that things like prohibition and RICO laws, as well as pretty much all instances of financial and stock market regulation, and even basic human rights as well as any laws designed to protect things like the health of citizens, are all examples of the US declaring certain business models illegal, but a sufficiently narrow use of 'business model' would mean those examples wouldn't apply.

     

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  16.  
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    Larryb, Jun 6th, 2014 @ 7:02am

    There is a forum for Uber drivers, news, and all things related at:
    Http://uberpeople.net

     

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  17.  
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    citizenw (profile), Jun 6th, 2014 @ 9:11am

    Re:

    You mean, like, never?

     

    reply to this | link to this | view in thread ]

  18.  
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    Jake, Jun 6th, 2014 @ 9:31am

    Re:

    Well, there was the Emancipation Proclamation.

     

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  19.  
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    The Wanderer (profile), Jun 6th, 2014 @ 4:04pm

    Re: Re:

    That was about products, though - the slaves themselves being the products; it's illegal to sell them and illegal to own them, just like with most drugs and other controlled substances, but the business models built on the backs of the slaves themselves were not targeted. (They just died as a side effect of prohibiting that product.)

     

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  20.  
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    Anonymous Coward, Jun 7th, 2014 @ 9:05am

    liability insurance

    See articles relating to:

    Yellow Cab facing federal probe over Medicaid contract.
    April 23, 2014

    ...drivers for the parent company of Yellow Cab did not have proper insurance required to transport patients in the first place.

    Vazquez’ attorney said the government is also asking about misuse of sub-contractors by Yellow. The family alleges Yellow essentially created shell companies around its employees to get around Medicaid regulations and protect Yellow from the liability of serious wrecks, like Vazquez’ death.

     

    reply to this | link to this | view in thread ]

  21.  
    identicon
    Anonymous Coward, Jun 7th, 2014 @ 9:15am

    insurance and franchises

    Search:

    Cabbies paid for insurance that Yellow Cab never provided

     

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  22.  
    identicon
    jan, Jun 11th, 2014 @ 5:30am

    UBER

    I’m trying to explain this to Car service and limo industry for some times that there is an answer to Uber that has been around and works well for hospitality. It is a wishful thinking that some legality is going to stop Uber. They are now operating in 128 cities and 37 countries around the world and grooving fast. And they accomplish this in only 4 years. We have a team that has the solution to save the limo trade, but service car industry need to realize that they need to do this now. We have pioneering transportation Central Reservation System (CRS) that connects a Supplier’s inventory and rates to the Global Distribution Systems (GDS’s) and mass distribution channels, such as Online Travel Agencies (OTA’s) and CRS rep companies. This way you are able to connect to the costumer way before Uber is able to get to them. So, if you are looking for a result we have it. jk10128@outlook.com

     

    reply to this | link to this | view in thread ]

  23.  
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    Anonymous Coward, Jul 4th, 2014 @ 11:50am

    Just Another Ploy For The State To Make Money...

    Lets be for real fokes, if the state came make a penny they will take full advantage...First,taxi cabs are typically filthy with smoke filled windows. Some taxi drivers profile passengers before picking them up and drive right by you. "It's happened to me" Uber will send you a driver profile prior to your driver arriving to pick you up. you know what you get before it even gets there. Tell me what cab company in the united states does a back round check and a urinalysis to a new driver. Safety, read the reply from Uber fokes, they insure each car with a 1,000,000 policy, not the regulated amount of 350,000. I assure you some of these cab companies operate so illegal. I have not used Uber or drive for them. but this is apples to oranges.

     

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  24.  
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    DP UBER SUCKS, Nov 20th, 2014 @ 12:10pm

    Uber needs to die

    don't care about why you all think Uber should be able to operate.
    all the Taxi and Limousine companies that operate have had to follow the rules for along time. Why should any other company be able to operate without following the rules.
    If Uber can go through the proper channels and operate legally then and only then should they be able to operate!!!!

     

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  25.  
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    Gwiz (profile), Nov 20th, 2014 @ 12:36pm

    Re: Uber needs to die

    all the Taxi and Limousine companies that operate have had to follow the rules for along time.

    They had to follow rules that were put into place at a time when such rules were necessary to protect the customers. Things like unsafe vehicles, overcharged fees, unsavory drivers, etc...

    What is different now with Uber and Lyft is that most of those rules are now unnecessary. Unsafe vehicles and creepy drivers are dealt with via instantaneous customer feedback. Overcharging is impossible because the route is displayed on the customer's phone with GPS and the fare is negotiated BEFORE the ride takes place.

    What is your argument for keeping these outdated rules in place when they are no longer needed? The only two reasons I can see are to keep the legacy cab companies afloat and so the municipalities can keep their licensing revenue flowing. Neither of those are good enough reasons for me.

    Not only that, but customer satisfaction seems to be greater with these new services as opposed to the traditional taxi services. If people WANT these services, who are you to limit their choices?

     

    reply to this | link to this | view in thread ]


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