Ride-Sharing Companies Feeling the Strain of Background Checks in California
September 26, 2014
The Wall Street Journal reported yesterday that the three big ride-sharing services, Sidecar, Uber and Lyft, have received warning letters from the district attorneys of San Francisco and Los Angeles. The letters focus on two components of the ride-sharing business: background checks and car-pooling features. The D.A.s claim that the companies’ practices violate California law, and they’re threatening them with civil penalties and injunctions. Ironically, California is the home state for all three companies, and the place where ride sharing first became popular.
The letters allege that the companies’ background screening policies and practices are lulling consumers into a false sense of security. The letter to Sidecar says that it is misleading consumers on their website, and that they don’t identify drivers who “have ever committed driving violations, DUI, sexual assault and other criminal offenses.” The letter demands that Sidecar remove its claims about background checks from its apps and website.
Ride sharing companies have been under increased scrutiny for shoddy background screening practices following a wave of reports of incidents involving drivers with a history of violence and crime. Uber claims to have upgraded its background checks earlier this year after a wave of negative publicity. The company was criticized for its use of multi-jurisdictional databases instead of using a more thorough search process that incorporates background screening best practices.
The other targeted violation relates to UberPool, Lyft Line, and Sidecar’s Shared Rides — the carpooling features recently launched by each company. Officials note that these services violate a section of the public-utilities code which prohibits transportation providers charging multiple people for the same ride (Public Utilities Code section 5401). In early September, the California Public Utilities sent a warning letter to the companies noting the violation and calling for a cease and desist.
The district attorneys are giving the companies until October 8th to respond.
The Future of Sharing and Background Checks
California is not alone. Plenty of other cities and states are concerned about the sharing economy, the need for better background checks, and closing the gaps in existing laws that are designed to protect consumers. It’s clear that sharing has gone mainstream, and business leaders, law enforcement and regulators are all struggling to catch up. Social media is making sharing easy and popular, and consumers are eager to reap the benefits. And while regulation is not always the answer, public safety and consumer protections should not take a back seat along the way.
For more information on the sharing economy and why it needs background checks, check out the September issue of BTW.
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