The battle to regulate ridesharing companies is currently being fought between local jurisdictions and states, and the only losers right now are passengers. While cities have been trying to tighten the rules on companies such as Uber and Lyft, states have taken over the role of regulating these companies and have generally passed laws that are much friendlier to the industry than the regulations introduced by the cities. While the industry does face some additional regulation to what it did in the past, it is still not sufficient enough to fully protect passengers who use the ridesharing services. As a result, passengers are at risk of injury in this inadequately regulated industry.
Much attention has been devoted to the legal and regulatory loopholes that ridesharing companies take advantage of to increase their revenues. This comes at the expense of both drivers and passengers. Cities have admirably attempted to tighten the rules that these companies face. For example, some cities have passed measures regulating pay, while other have instituted requirements for disabled person’s access to the ridesharing services. Other cities have filed lawsuits against the companies for a lack of safety. The new local regulations have also touched on passenger safety but many state legislatures have passed laws that have taken over regulating the ridesharing companies from the cities. Then, the states turn around and pass laws that are less stringent on passenger safety.
The end result is that passenger safety is compromised in many ways. One of the biggest problems that Uber and Lyft face is the disturbingly large number of reports of sexual assaults of passengers who are using ridesharing services. Recently, Uber released safety data that reported that approximately 3,000 sexual assaults occurred in ridesharing vehicles last year. This number is on the rise, up approximately four percent from the previous year. The assaults detailed here included both instances where drivers attacked passengers and vice versa. While there has been some movement towards tighter regulation of these companies, this alarming report of criminal activity in Uber vehicles show that much more is necessary to better regulate these companies.
While companies have instituted some background checks of their drivers, Uber and Lyft are not subject to high-level scrutiny of the means that they use to examine drivers. There are reports that these companies have skimped at times on their background check expenses. Now that Uber and Lyft are public companies, there may be even more of an incentive to cut corners in order to maximize profits for shareholders. Uber has already had to settle lawsuits that were brought by several cities for lax background check practices. However, this has resulted in only incremental changes, and the companies can still skimp on these expenses at times.
What would protect passengers more would be some uniform standards that ridesharing companies must follow for safety. Instead, there is a patchwork of regulations between cities and states with no set regulatory standards. Congress has not really stepped into the breach, and Uber and Lyft refuse to even appear before Congress to answer questions.
In order for the ridesharing industry to succeed as well as protect its passengers, further regulation will be necessary. Recently, there was a report in the Washington Post about how Uber’s investigations unit aims to protect the company instead of its own passengers. In some cases, drivers are allowed to continue working even after they have accumulated the “three strikes” that company policy demands result in their firing. Uber does not always enforce its own rules. When it does take enforce to enforce its rules and fires drivers, many of these people will simply start to drive for Lyft, who does not have access to these disciplinary records.
The negative publicity that the ridesharing companies are receiving has served to limit their previously explosive growth. As public companies, Uber and Lyft have not delivered the performance to their shareholders that was expected. The stock prices have languished and revenue growth has trailed expectations. Passengers have still not fully accepted ridesharing companies as a viable alternative in part because of the reputation for a lack of safety. Many people still do not quite know what they are getting when they call for and get into one so they still opt for the more expensive yet safer taxicabs.
At the same time, the stalled stock prices have created more incentives for the companies to cut costs at the expense of safety. Absent concentrated efforts to regulate Uber and Lyft at the federal and state levels, the safety records of these companies will not improve because the ridesharing companies will not make the changes themselves. However, ridesharing companies have political protection in many states and political affiliation dictates in part how strictly regulation will be in a certain area.
In the meantime, customer safety metrics have not improved and, in some regards, are getting worse. High-profile passenger horror stories of robberies and assaults still continue to be reported upon in the media with regularity. In addition, it is difficult to sue ridesharing companies due to their legal structure. Governments will need to act forcefully and in short order to protect passengers who place their trust in Uber and Lyft.