The Charlotte City Council has postponed implementing new rules for ride-sharing services such as Uber and Lyft, as it waits for the General Assembly to possibly create statewide regulations.
The council’s public safety committee had been scheduled Thursday to consider new regulations on cars and drivers working for so-called digital dispatch services, but it canceled its meeting.
Council member Kenny Smith, a member of the committee, said the council is wary of passing rules requiring Uber and Lyft drivers to pass city background checks and safety inspections on their vehicles. Smith, a Republican, has questioned whether the city is being too strict in regulating the drivers and their cars.
Uber and Lyft oppose city background checks, saying the companies already do their own background checks. The companies have said that they effectively police themselves, and that city-mandated checks would be too burdensome for drivers, discouraging them from working for the ride-sharing companies.
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The proposed Charlotte regulations would have also deregulated cab fares, which are set by the city, to allow cabs to compete more effectively with Uber and Lyft.
Such regulations have become a flashpoint worldwide, as cities, states and countries struggle with how to regulate companies that are upending the established taxi business model. Different areas have come up with wildly different solutions. Germany banned Uber earlier this month, while Colorado recently became the first state to enact a formal set of regulations allowing the company to operate.
Cab drivers have protested in cities from Washington, D.C., to London to Barcelona, jamming traffic to speak out against what they say are unfair business practices.
Uber, Lyft and other ride-sharing companies such as Sidecar say they’re giving customers a more convenient ride at a better price than traditional taxi companies. That’s played well with investors as Uber and Lyft grow rapidly – in a recent round of investment, Uber was valued at over $18 billion.
Here’s how the ride-sharing companies work: Users download an app, such as Uber, to their phone. They request a ride, and a driver using his or her personal car comes to pick them up, finding them with GPS. The fare is calculated based on distance traveled and supply and demand at that time, and it is automatically paid with the user’s credit card. No cash changes hands, and the service is meant to feel more like getting a ride from a friend than taking a cab.
Cab companies have complained in Charlotte that they’re regulated more strictly – with city-mandated background checks for drivers, car inspections, and licensing fees – than the ride-sharing companies, and thus have higher costs.
Earlier this year, the General Assembly’s Revenue Laws Study Committee was directed by legislators to “study the registration requirements, fees and penalties applicable to for-hire passenger vehicles, including for-hire passenger vehicles directed by digital dispatching services.”
That study is expected to be finished in January.
Obaid Khan, co-owner of Charlotte-based Diamond Cab, said his company and other independent cab operators in Charlotte might not last that long.
“What they’ve done in the past five to six months is scary,” said Khan. “They’ve set their rates so low small companies like us can’t compete with them.”
“It’s just not fair for the cab companies that are being regulated,” said Khan, who said the city should loosen regulations on cabs if it won’t tighten them on Uber and Lyft.
Although City Council’s public safety committee canceled its Thursday meeting, a presentation posted online for that meeting sheds light on what sort of local regulations ride-sharing companies will agree to.
Uber and Lyft have told city staff that they’re willing to have the city’s Passenger Vehicle for Hire Board audit a third-party vendor that performs background checks on their drivers. But they fear that putting their drivers through the same city background checks as cab drivers would prohibit them from attracting drivers, many of whom are part time.
“Both companies feel that the current draft is too prohibitive to their ability to recruit drivers,” city staff noted.