Little Rock's city attorney has sent a letter to ride-sharing companies Uber and Lyft, which both recently began advertising for drivers here, informing them that the service is illegal and that they must abide by taxicab regulations if they want to operate in the city.
The San Francisco-based companies operate through mobile apps to provide taxi-like services, but say they are technology companies, not transportation companies. There are branches of Uber that offer traditional taxicab and luxury vehicle services, but what's being advertised in Little Rock is UberX -- a ride-sharing service where drivers use their personal vehicles. Lyft offers a similar peer-to-peer ride service through its app.
The apps connect the drivers with customers. A person types in his current location and where he wants to go into the app, and any nearby, available driver can accept the ride request. The client pays for the ride with a credit card through the app, so cash isn't needed. There's a photo of the driver so the client knows who is picking him up.
Drivers get 80 percent of the fare, while the companies take 20 percent. To be an Uber driver, a person has to be at least 21 years old and own a four-door vehicle that is insured and a 2004 model or newer. Lyft drivers have to own vehicles that are a 2000 model or newer.
At-large City Director Joan Adcock had been working with City Attorney Tom Carpenter for months trying to find out what Little Rock could do to prevent such ride-sharing. She cited safety and regulation concerns as her reason for opposing ride-sharing in Little Rock.
City and state governments across the country have taken stands against Uber since it was launched in 2010, yet the company still operates in most major cities. Lyft typically begins operation in cities that Uber moves into.
"The bottom line is that people in over 150 cities across the world are experiencing the added economic opportunities and the safe, affordable and reliable transportation alternatives that Uber provides," company spokesman Taylor Bennett said. "Attempts to limit consumer choice and restrict economic freedoms do nothing but harm the people that rely on Uber to get around their cities and make a living."
But city officials say Uber and Lyft's business models don't abide by city codes. Adcock had been asking for weeks that Carpenter send Uber a cease-and-desist letter and that the city manager issue a public service announcement letting residents know that ride-sharing is against city ordinance. She became frustrated Tuesday at the Board of Directors meeting when city officials initially didn't agree to do that.
"I've been told this [service] is illegal, that 'Yes, they are coming to Little Rock,' and, 'No, we don't want them here,' but for some reason nothing has been done about it," Adcock said.
"Last week, we talked about how we need to warn the public about this. We would have no protection for our citizens over this. There's no accountability. I think it's time we have something done about this company moving in here doing illegal [business] against the ordinances for the City of Little Rock."
City Manager Bruce Moore told Adcock that he's hesitant to put out a public service announcement about something that isn't currently happening.
Both companies have advertised for drivers in the city, but there's been no indication that drivers are operating in Little Rock right now, Carpenter said.
"Until they actually do something, we have no way to stop them," he told Adcock at Tuesday's meeting. "There's little difference in doing this and stopping someone on the street and giving them a ride for just a few dollars."
Carpenter agreed with Adcock's concerns about the city not being able to regulate Uber or Lyft. The city's transportation code requires drivers of taxicabs and luxury vehicles to undergo inspections, abide by certain regulations on airport property and other standard rules, have commercial liability insurance and even abide by a dress code. It also requires ground transportation services to have a central office in town. But ride-sharing isn't defined in the ordinance.
Carpenter sent letters to Uber and Lyft executives Thursday informing them that they must obtain the proper ground transportation permits before they employ drivers in the city and that they also must come into compliance with the other parts of the code.
He noted neither company is registered to do business in Arkansas, which could subject them to a civil penalty of up to $5,000 per year. He also said that the companies don't adhere to parts of the transportation code that require taxi businesses to offer service in all parts of the city 24/7, nor the part that requires a rate schedule to be posted. Carpenter requested a response from each company within 10 working days.
But Bennett, the Uber spokesman, said the company isn't a taxi service.
"We are not a transportation company, so we don't employ drivers or own vehicles. We often find that existing regulations in place are antiquated and were created before innovative technologies like Uber were even fathomed," she said. "It is our hope to work with city officials in Little Rock to modernize those regulations and find a permanent home for ride-sharing in the city."
The company performs three-step criminal background checks that go back seven years and include county, state and federal checks, as well as a national sex offender screening, Bennett said. Uber also provides commercial liability insurance coverage for the full length of a passenger's trip and for the drivers when they are on the way to pick up a customer, she said. Lyft's website says they also perform criminal and driver background checks and have commercial liability insurance coverage.
The taxicab industry has been critical of ride-sharing services, even launching whosdrivingyou.com to protest.
Ellis Houston, president of Greater Little Rock Transportation Services, which operates Little Rock Yellow Cab, has been active in taking a stance against companies like Uber, he said. Houston is also president of the Yellow Cab services in Birmingham, Ala., and Misssippi's Gulfport-Biloxi metropolitan area.
He described Uber as "bullying its way into communities and wreaking havoc in the taxi industry."
Uber is also advertising for drivers in the Birmingham market, but that city's attorney has sent a cease-and-desist letter telling the company to stop advertising for illegal services. It has not responded to Birmingham's request, Houston said.
Media reports state that Uber has consistently ignored cease-and-desist letters it has received from various city and state government agencies.
In Memphis, the airport authority recently announced that it wouldn't allow Uber or Lyft to operate on airport property until the companies get the proper permits from the city, as all cab services are required to do. Memphis officials sent Uber and Lyft cease-and-desist letter Friday.
The Birmingham City Council is considering an ordinance at a public hearing this week that would address ride-sharing services if they were to start in the city, Houston said. That proposed ordinance would require anyone operating a vehicle for hire to have a commercial driver's licence and explicitly states that third-party transportation apps must abide by the city's licensing and regulation codes.
"The city council there is being a little more proactive than I feel the directors are in Little Rock," Houston said. "Uber doesn't ask for permission, they don't come into the regulated industry and fill out the proper paperwork, get their business license and pay the necessary fees like I do. They just come in and start operating and then roll in their PR machine and try to legitimize themselves and get public support."
Opponents also have accused Uber and Lyft drivers of declining people riding with service animals or those with wheelchairs, which is against the Americans with Disabilities Act.
Proponents of ride-sharing say the service is cheaper than traditional cabs and also tout the quick and efficient nature of the apps.
Houston said he thinks that legal issues will catch up with ride-sharing companies eventually, but said he wonders how many taxicab companies will go bankrupt before then.
"We are not worried about competition. We think we can compete with anybody, but we would like it to be on a level playing field," Houston said. "There shouldn't be unfair advantage with them not paying for 24/7 commercial insurance like I do, permits, business fees, etc."
Metro on 07/14/2014