SideCar Takes Seattle for a Ride

The ride-share startup says it's exempt from regulations. Seattle isn't buying it.

San Francisco startup SideCar has brought its smartphone-based ride-sharing service to Seattle. It's got a cool app and an environmental spin. Says the company's website: "SideCar is moving transportation in a big, sustainable, community-driven direction."

Whether it's a legal direction, given the company's sidestepping of a host of regulations pertaining to taxis and for-hire cars, is another question.

Here's how it works: Ordinary people who want to offer rides register with SideCar. When SideCar's drivers are available to give rides, their whereabouts are plugged into the company's app. Would-be passengers use the app to find drivers near them.

Craig Leisy, manager of Seattle's Consumer Affairs Unit, which regulates commercial vehicles, says the business raises concerns about public safety, and he's asked the city's legal department to investigate whether his department's regulations apply to SideCar and several similar companies that have recently started in Seattle.

California's Public Utilities Commission has already determined that SideCar and similar startups should be following commercial regulations, and in the past few months, the agency has issued cease-and-desist notices to them.

SideCar has kept going regardless. Transportation regulations "were created when the the big innovative technology was the telephone," SideCar CEO Sunil Paul tells SW by way of explanation. He's part of a new world, he contends, and those old-school regulations don't apply. Moreover, he asserts, "We are not a transportation company, and we don't operate a transportation service. All we're doing is providing the means for passengers and drivers to connect with one another."

Technically, no fare is required, but SideCar's app suggests a "donation" based upon what previous passengers have given for similar trips. Here's the rub: Leisy says that anytime compensation is involved, regulations kick in. And he's not buying the notion that fares are strictly voluntary. SideCar's app includes a way for drivers to rate passengers, just as passengers can rate drivers, Leisy notes. "I'm not sure any driver would ever take you again if you don't pay."

Paul insists passengers really are free to pay nothing, but says that in San Francisco only about 1 percent of them have done so. He chalks that up to people's generosity. We're not talking nominal amounts: A short ride might entail an $8 or $10 payment, about what a taxi would charge, Paul says, although he adds that long rides tend to be cheaper than a taxi fare. SideCar takes a 20 percent cut, he confirms.

If SideCar is judged to be a commercial operation, the regulations it must meet are extensive, most of them aimed at protecting passenger safety, according to Leisy. Drivers are fingerprinted and subject to annual criminal background checks and examinations of their driving record. They undergo a physical exam, several days of training, and a written test. They need to carry expensive commercial insurance, and their cars, which are inspected, can only be 7 years old.

Then there's the license they need to pay for, which costs $600 in Seattle, if they can get one at all. The city caps the number of licenses it hands out, and none are now available.

Frank Dowgwilla, general manager for the dispatch operation that serves Yellow Cab, says it wouldn't be fair for SideCar's drivers to get to skip all that. "We need a level playing field," he says.

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