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Ride-sharing service runs into roadblock in NM

Copyright © 2014 Albuquerque Journal

Wildly popular ride-sharing service Lyft Inc. came to a screeching halt in Albuquerque on Wednesday when the state Public Regulation Commission ordered it to cease operations immediately.

The five-member commission voted unanimously to order Lyft – a mobile device-based service that connects people seeking rides with people who have cars – to provide testimony by June 2 in response to allegations that it is illegally operating a taxi service.

The company, which launched in June 2012, is particularly popular with young people. It currently operates in 60 cities, and it plans to extend service to Miami today.

Lyft driver Phil Werner adjusts his pink mustache in a parking lot off of Carlisle Boulevard on Wednesday after the Public Regulation Commission earlier in the day issued a cease and desist order for the ride-sharing service. (Marla Brose/Albuquerque Journal)

Lyft driver Phil Werner adjusts his pink mustache in a parking lot off of Carlisle Boulevard on Wednesday after the Public Regulation Commission earlier in the day issued a cease and desist order for the ride-sharing service. (Marla Brose/Albuquerque Journal)

New Mexico is one of many states nationwide where Lyft is facing potential regulatory restrictions, but it is among the first to order the company to cease operations, according to Douglas Shinkle of the National Conference of State Legislatures.

The PRC’s Transportation Division accuses the company, which launched in Albuquerque on April 24, of five different violations, including operating a compensated commercial transportation service without authority, failing to file proof of financial responsibility, and not adhering to safety requirements.

The company could potentially be fined $10,000 for each individual violation, plus an additional $10,000 per violation for every day it continues to operate without authority.

“They need to apply for a temporary permit if they want to continue operating while this case moves forward,” Commissioner Pat Lyons told the Journal . “Our biggest concern is public safety – that their drivers pass drug tests, that they have insurance, and that the cars they use are in good operating condition.”

Company spokeswoman Paige Thelen said Lyft already does all those things, but will comply with the order to cease operations and respond to the Transportation Division’s allegations.

The company also expects to file for a temporary operating permit while the case proceeds.

“We will continue to work with local officials,” she said. “We’re open to fair and common-sense regulations to allow ride sharing in New Mexico. We recently signed an agreement with the city of Detroit that allows us to operate while we work out other issues, and we’re open to seeking something similar in New Mexico.”

If Lyft applies for a temporary permit quickly, the commission could approve authority to restart operations prior to June 2, said Transportation Division Director Ryan Jerman.

But that would be a separate docket from the case now underway about alleged violations, which was initiated by PRC staff who investigated complaints about the company operating illegally. Jerman did not say who had made the complaints to the commission.

“Lyft would need to provide insurance, safety and driver information to the PRC,” for a temporary permit, Jerman said. “The commission could then consider that right away while the other enforcement case continues.”

A taxi service?

Lyft says it simply operates a ride-sharing platform, not a commercial taxi service. Passengers and drivers communicate directly with each other via Lyft’s mobile app, and rather than charge fees for service, “donations” are requested from passengers.

The suggested donation is $1.85 per mile or 30 cents per minute, plus a $1.35 pickup fee and a $1 safety fee to help pay for insurance. There is a $5 cancellation fee.

“At the end of each ride, a prompt for a suggested donation appears on the passenger’s mobile device,” Thelen said. “The drivers keep 80 percent of that, and Lyft takes a 20 percent cut.”

Under New Mexico’s Motor Carrier Act and the PRC rules and regulations, any compensated transportation service must apply for a certificate or permit to operate, show proof of up to $1 million in insurance, conduct background checks on drivers, enforce no drug-use policies and demonstrate vehicle safety.

Thelen said Lyft already does those things independently of state regulations.

“Every driver is screened for criminal and traffic offenses, and their vehicles must pass a 19-point inspection,” she said. “There is an absolutely zero-tolerance policy for drugs and alcohol. To enforce that policy, we have a 24/7 support team to track suspicion of intoxication or drug use.”

Apart from drivers’ personal vehicle insurance, Lyft offers up to $1 million in liability coverage and the same amount in uninsured and underinsured motor vehicle coverage.

The bottom line, Thelen said, is that Lyft is not a taxi service, but a social platform to connect everyday drivers who operate personal vehicles with people looking for a ride.

The company said it did not have the number of drivers and users in Albuquerque available. But Thelen said Duke City residents are embracing the service.

“We’ve seen a very enthusiastic response from drivers and passengers who say they love having more transportation options and the opportunity to meet new people,” Thelen said. “We’ve gotten a lot of great feedback.”

Nevertheless, the company could face an uphill battle at the PRC.

“They give unknown passengers rides at a fee, and that seems like a taxi cab service to me,” Lyons said. “You can call it what you want, but you’re offering a service and getting compensated for it.”

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