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Economy & Business

Ride-Sharing Services Lyft, Uber Face Fines From PUC

Growing popularity and the support of Pittsburgh Mayor Bill Peduto were not enough to prevent ride-sharing companies Lyft and Uber from getting hit with five and six figure fines by the Pennsylvania Utility Commission (PUC) last Thursday.

According to PUC press secretary Jennifer Kocher, Lyft faces a proposed fine of $130,000, while Uber’s penalties amount to $95,000. Each company was fined $1,000 per day for every day since they began operations in Pittsburgh. In addition, twelve Lyft drivers and eleven Uber drivers were penalized $1,000 each and face the threat of PennDOT suspending their vehicle registrations.

Kocher explained the fines were “proposed,” meaning those being fined have 20 days to accept and pay the fines or provide an answer denying the complaint. In the latter case, the matter would be referred to an Administrative Law Judge for a hearing. If the companies and drivers fail to respond, the commission can enforce the suggested penalties without any further proceedings.

Lyft and Uber are both California-based firms that connect drivers to customers via smartphone apps. The drivers use their own cars, and are not employees of the companies. Drivers are paid a “suggested donation,” through the app, and a percentage of the donation goes to Lyft or Uber.

According to Kocher, both companies are being penalized for operating without proper approval.

“In Pennsylvania, if you are operating a business or providing transportation for compensation, you are required to have a license,” explained Kocher. “That license insures that the drivers have been properly vetted and screened, that the vehicles have had the proper inspections, and that they are carrying the proper insurance.”

Lyft and Uber have filed license applications, but the applications were protested by the commonwealth’s insurance commission, the Insurance Federation of PA, and various taxi services. There is no scheduled date for a PUC hearing to address these protests.

In an official statement issued in response to a request for an interview, Uber said, “Approval [of the license] has been delayed due to taxicab and limousine companies who do not want to have to compete with a safe, affordable, and reliable transportation option that is currently valued by riders in cities throughout the world.”

Kocher maintains that the PUC gave the ride-sharing companies fair warning when they began operations without filing for licenses.

“We try to talk with them…we provide them with the information, copies of what they need to do to become in compliance and including, very specifically, that they have to be in compliance before they begin operating and that having an application on file for a license is not the same as having an approved license,” said Kocher.

It is yet unclear whether Lyft and Uber will pay the fines or legal costs for the 23 drivers who face penalties. Uber's statement reads in part, “Efforts to penalize drivers directly impact their ability to expand economic opportunities, create new jobs and contribute to the economy.  We will continue to firmly stand by partner drivers and look forward to continuing our work with the PUC to find a permanent home for ride-sharing in Pennsylvania.”

In April, PUC enforcement officers filed criminal citations against the drivers for operating passenger carriers without certificates of public convenience. Now the PUC is adding on fines and threatening to have the drivers' vehicle registration pulled.

When asked why these drivers were being penalized twice, Kocher responded, “Because the companies have indicated that it was not a deterrent to cite the drivers criminally, we felt that we needed to go this route in order to insure that we can provide safe transportation and safety for the overall community.”

According to Kocher, one of the biggest concerns the PUC has with ride-sharing services is adequate insurance. If a ride-share driver is involved in an accident with another vehicle, there is some dispute as to whether Lyft or Uber’s insurance will cover the costs. According to their websites, both Lyft and Uber have million-dollar insurance policies that cover drivers while transporting passengers acquired through their apps and additional policies that cover drivers who are waiting to pick up rides with the app turned on. However, Kocher says that the PUC has yet to approve these policies.

Lyft also declined a request for an interview, but said in an official statement, “The people of Pittsburgh deserve more transportation choices, and they have enthusiastically welcomed Lyft to the city for affordable, convenient and safe rides. We hope that local leaders will listen to their constituents and focus resources on crafting a solution that will allow ride-sharing to continue to grow and thrive in the Pittsburgh community.”

According to Kocher, the regulations governing transportation licenses in PA might adapt to accommodate ride-sharing services, but that the process is lengthy. In the meantime, the PUC will continue to put pressure on Lyft and Uber.

“We don’t get to pick which laws we enforce,” said Kocher. “We are charged with enforcing the law as it exists.”