More regulation of app-based ridesharing services is needed

There’s no question that New Yorkers now have more ways than ever before to get around the city. The latest additions to NYC’s transportation options are app-based ridesharing services like Uber and Lyft. This new ridesharing model is popular with passengers because it is usually cheaper than a regular taxi. And drivers like being able to make some extra money putting their personal vehicles to work.

But as we discussed in a February post, the hidden costs of app-based ridesharing services are issues of liability. When car accidents and pedestrian accidents occur involving Uber and Lyft drivers, who can be held liable? For that matter, whose insurance covers the costs of vehicle damage and medical expenses?

Recently, the city’s Taxi and Limousine Commission proposed a rule that would give it the power to regulate changes made to smartphone apps “used to arrange vehicle rides for hire,” according to the New York Times. App developers would be required to “apply for approval of a modification” for certain software changes, most likely those that alter driver and user interfaces.

Tech companies are already criticizing the proposed rule, alleging that it will give the commission veto power over any software updates, essentially hindering competitiveness and innovation. It’s unclear whether this proposed rule will have much effect on the app-based ridesharing industry, either positive or negative. One thing is clear, however: Regulation is needed.

Services like Uber and Lyft can afford to undercut prices charged by established taxi services because they don’t have the same regulatory costs. Some of the costs taxi companies must pay include licensing with the city (medallions) and commercial insurance (covering livery drivers). These costs are high, but liability is generally not an issue or even a question. The same cannot be said for ridesharing services, including Uber (which has already tried to dodge liability in some cases involving pedestrian deaths).

Regulation is not popular, but it is necessary. In a city like New York, where accidents are all too common, drivers and riders need to know that when a crash does occur, someone will be held accountable and victims will not be left without appropriate compensation.

Source: The New York Times, “Uber and Internet Giants Assail New York City’s Plan to Bolster Rules for Car-Hire Apps,” Matt Flegenheimer, May 13, 2015