Hundreds of taxicabs inched around Los Angeles City Hall on Tuesday morning, horns blaring in unison, to protest against a trio of so-called high-tech bandit taxi companies that let smartphone users summon a car with the swipe of a finger.
Lyft, Sidecar and Uber provide iPhone and Android apps that connect drivers with people who need a ride, either in a town-car-like vehicle or a private car paid for with a "donation" rather than a fare. Use of the apps, often marketed as a cheaper, more casual alternative to taxis, has rapidly gained popularity in Los Angeles — except with city officials, who say the cars used for rides operate illegally, outside the city's background check, inspection and insurance processes.
The three companies received cease-and-desist letters Monday from the Transportation Department. If drivers are caught working for a commercial transportation service without a license, the letter said, they could be fined, arrested or have their cars impounded.
Lyft, Sidecar and Uber do not plan to leave Los Angeles. They say they facilitate communication between a driver and a passenger, rather than coordinate a taxi service, and operate legally in California under settlement agreements with the state's Public Utilities Commission. All three say they conduct background checks on their drivers and have insurance policies.
The tiff between regulators and innovators is the latest in an ongoing debate over how to classify start-up companies with new ways of providing services that don't fit under existing laws. Other major cities, including New York, Boston and Washington, have taken similar actions against one or all of the companies.
"When technology starts to work its way into city life, these are the sort of growing pains that happen," Uber Chief Executive Travis Kalanick said. Lyft and Uber said they are working with the utilities commission to establish a new designation for commercial ride-sharing vehicles. A proposal is expected in about two weeks.
The apps all work similarly. Users with iPhones or Android devices summon a car using one of the apps, which display a map showing drivers' current locations. After passengers arrive at their destination, they pay with a credit card linked to the app. Lyft and Sidecar suggest a donation that the passenger can modify. Uber's rate is non-negotiable.
Uber says it uses drivers who have been licensed by the state as "charter-party carriers." To operate legally, city officials said, the company would need to file receipts and arrange all trips in advance.
Lyft and Sidecar drivers operate their own cars. The Legislature would have to change California's business, vehicle and public utilities codes for them to be allowed, officials said. Alternatively, all cars would have to be registered and insured as commercial vehicles, drivers would have to be licensed and the City Council would have to approve the start-ups as authorized cab companies. The Council has capped the total number of cabs in the city at 2,300.
The city's taxicab administrator, Thomas Drischler, said to qualify as a ride-share, passengers must be picked up between the driver's home and work and be dropped off somewhere on the way.
"You're not answering 'phone hails' on an app, taking them wherever you want to go and taking money," Drischler said. "And who would believe it's a donation? It's a for-profit company. That's absurd."
William Rouse, president of the Taxi, Limousine and Paratransit Assn., said he didn't have hard numbers for the effect on business since the services began operating during the last year.
Aydin Kavak, a taxi driver and secretary of the Yellow Cab Co-op, said he has been called to pick up a passenger and watched them get into a Lyft car, distinctive for their bright-pink mustaches on the car grills. "I was only the backup," Kavak said. "I drive 30, 45 minutes, and get nothing out of it."
Lyft, Sidecar and Uber have been the targets of undercover stings conducted by the Transportation Department and the Los Angeles Police Department to root out "bandit taxicabs" since the companies launched in L.A., officials said. In the last month, four Uber drivers have been arrested. "If they continue to operate, they're on the radar screen," Drischler said.
The taxicab drivers circling City Hall on Tuesday got their own taste of regulations: Some were pulled over by the Los Angeles Police Department for excessive honking.