Archives for March, 2013

SideCar, a new ride-sharing service, arrives in D.C.


Looking for some company — and maybe a little cash — the next time you drive? A new ride-sharing service wants to help.

SideCar, an app-based service that is basically a 21st-century version of carpooling, arrived in the District on Friday.

The premise is simple: Travelers can use the app to hitch rides with nearby drivers, while drivers who sign up can get paid for giving these rides. There’s no set fee, so passengers can pay the drivers any amount. (The app does come with a suggested donation, but riders can pay more or less if they want.)

Of course, the idea of getting into an unfamiliar person’s car raises some obvious questions. But the company says it takes safety seriously.

“Every time you get into a taxicab you get into a stranger’s car,” said Nick Allen, the company’s co-founder. “And we go through a lot of measures to make sure it’s safe.”

Allen said that all drivers are given a “full background check,” which includes looking for any criminal history. SideCar also verifies that drivers have license, insurance and registration. Drivers are also given additional training, and all rides are tracked by GPS.

Riders also have the option to pick specific drivers or, if they want, to block some drivers from seeing that they need a lift.

SideCar began offering rides in San Francisco, where the company is based, and in Seattle in 2012. It began service in Austin, Los Angeles and Philadelphia last month, and expanded into New York, Boston and Chicago last week. D.C. represents the last bit of expansion for now, Allen said.

The rollout hasn’t been without any headaches for the company, which raised $10 million in financing from Google Ventures and Lightspeed Venture Partners last November. SideCar sued Austin recently, following a cease-and-desist letter from the city accusing the company of running an unlicensed taxi service, according to the Austin American-Statesman.

After SideCar arrived in Philadelphia, the city responded by impounding and fining vehicles. Last year, a California commission fined SideCar and similar services for lacking the proper permits.

The notion of an app-based car service encountering problems with local officials obviously sounds familiar in the District. Uber, the car-dispatch app, had repeated problems with local officials before gaining legislative acceptance in December.

Allen said that Uber and SideCar aren’t really comparable, because Uber is a car service that charges a fare. But he said these early hiccups are just a matter of regulators trying to figure out how to properly oversee these services, which don’t always fit into preexisting categories.

“They think we’re a taxi or a limousine, and we’re actually very different,” Allen said. He said it’s more like an app-based slug line.

For the first few weeks, SideCar will only be available on Fridays and Saturdays between 5 p.m. and 3 a.m. the following morning. After that, it should become available every hour of every day of the week — as long as drivers are available.

“It’s just another option in transportation,” Allen said. “There’s buses and there’s trains and taxis and personal automobiles, and we are another option.”

The app is available on Android and Apple. You can follow SideCar in D.C. on Twitter at @SideCarDC.

What do you think of SideCar? Does it sound like something you might use, or are there potential issues that may keep you away? Let us know in the comments below

Drivers: Uber Is Skimming Our Tips


Hailing a taxi in San Francisco used to be about as easy as panning for gold, but that was before the advent of Uber, the San-Francisco-based tech company that’s shaking up the taxi and town-car businesses in major cities. Tapping a button on my iPhone’s Uber app last Thursday produced a Yellow Cab at my downtown office in less than two minutes. “It is the best thing, my friend!” my beaming driver, Solomon Alemayhu, said of the GPS-based cab-hailing service. He likes the convenience factor so much, in fact, that he’s willing to overlook allegations that Uber is improperly skimming from its drivers’ tips.

According to the company website, Uber’s smartphone-based payment system automatically adds to the rider’s tab a $1 booking fee plus a 20 percent gratuity “for the driver.” But as Alemaythu and I drove through Chinatown, he told me that half of that gratuity actually goes to Uber. If that’s true—and Uber insists that it is not—then the company would be misleading consumers and breaking the law in some cities.

In Boston, for instance, Uber faces a class-action lawsuit over the tip-skimming allegation. Filed in late December on behalf of taxi driver David Lavitman, it accuses Uber of violating a state law stipulating that “no employer or other person” may take any portion of a worker’s gratuity. The lawsuit refers to a company document that explains how Uber and the driver divide the earnings: “We will automatically deposit the metered fare + 10% tip to your bank account each week,” it says. It cites the following example of how Uber would handle a $10 fare:

Uber Boston general manager Mike Pao says the document was just a promotional handout and doesn’t reflect Uber’s actual partnership agreement with drivers. “Since we launched here in Boston, the agreement with taxi driver partners has been that 10 percent of the metered fare goes to Uber as a marketing fee,” he insists. “Uber does not touch the tip.”

When I asked Pao for a copy of Uber’s partnership agreement, he referred me to an Uber “terms and conditions” page that lacks specific details about how Uber and drivers share profits. I repeated my request to Uber’s national PR guy, Kenneth Baer, but only received another statement from Pao: “Uber takes 10% of the metered fare as commission, plus the rider’s $1 booking fee, and all drivers are told this during the on-boarding process.”

The next day, Uber’s explanation of its tips policy seemed to have changed again [see below for comment from Uber]. “We don’t take our cut from the fare or the tip,” Uber’s head of policy, Corey Owens, told me when I ran into him outside Uber’s headquarters. “What happens is that the driver pays Uber a commission based on the services rendered.” He added that the commission amount varies widely depending on city and partner company and refused to cite any specific numbers.

Uber is just “backtracking off of what was very clearly the arrangement between it and the drivers from the beginning,” contends Lavitman’s attorney, Hillary Schwab.

To some drivers, the wording of the deal may not matter so much—the company’s “commission” would be the same whether it’s half of a 20 percent gratuity or a 10 percent surcharge on the fare. The distinction may matter more to passengers, however. In October, Uber rider Caren Ehret filed a class-action lawsuit in Chicago arguing that its practice of snapping up a portion of the “gratuity” charge had defrauded her and other passengers by making the “metered fare” appear misleadingly low. “She has a right for her gratuity to be remitted to the driver,” contends Ehret’s attorney, Hall Adams III.

These skirmishes highlight the types of challenges faced by startups aiming to buck an established industry with smartphone-based transportation apps. The San Francisco ride-sharing services Lyft and SideCar rely on drivers who lack taxi medallions; they bypass the regulated market by asking riders for “voluntary donations” in lieu of fares. Uber also features town-car services called Uber Black and Uberx (a lower-cost version that utilizes hybrids)—and it’s planning to enter the ride-sharing market too. All of these services appeal to consumers because they’re cheap, convenient, and allow people to rate their drivers, adding a layer of accountability to an industry with notoriously bad customer service.

Yet Uber’s honeymoon with its hometown may be coming to an end. With increasing competition, it recently cut its town car fares in San Francisco by 10 percent. Late last year, the California Public Utilities Commission threatened Uber with $20,000 fine for allegedly ignoring insurance regulations, then began drafting a new set of ride sharing rules that could give Uber the squeeze.

This past November, two long-time San Francisco cabbies filed a class-action lawsuit against Uber claiming that it breaks the law by dispatching limos and town cars that are not licensed as taxis. “Simply stated, Uber’s ‘partner’ drivers, who are operating without restriction, are taking passengers, and thus income, away from legally sanctioned taxicab drivers who are literally playing by the rules,” the suit says.

“My biggest beef with these guys is that this app is allowing them to break the law, and the Pubic Utilities Commission is allowing them to get away with it, because they have $50-million venture capitalists as backers,” says Barry Korengold, the president of the San Francisco Cab Drivers Association. “The cab drivers don’t have that kind of money to hire lawyers to fight this.”

Uber’s defenders write off the complaints as sour grapes from a monopolistic industry that loathes competition and accountability. But the grumbling is growing among Uber’s own partners; in recent weeks, dozens of Uber Black drivers have picketed the company’s San Francisco headquarters over what they consider unfair labor practices. A banner held up last Friday read, “Stop stealing our tips!”

Alemayhu, my taxi driver last Thursday, was trying to keep a positive attitude about the taxi-tech revolution. He said he hoped Yellow Cab’s own taxi-hailing app could eventually defeat Uber at its own game. “They can beat them on price, easy!” he said, snapping his fingers. “They just have to change their system.”

UPDATE: Uber representative Kenneth Baer says that Owens was only referring to Uber Black drivers, who, unlike Uber’s taxi driver partners, do not receive any tips through Uber’s payment system.

Josh Harkinson

Uber charges illegal tips


Popular taxi and sedan service Uber is charging an automatic 20 percent tip on cab rides booked through its app or website.

The DC Taxicab Commission says that’s illegal — but so far the agency can’t do anything about it.
The District’s top taxi regulator, Ron Linton, told cabbies last month that Uber shouldn’t be doing that and that he had asked them to stop.
“We are surprised as we had been assured by their attorney that Uber would comply with the regulations to prohibit charging a mandatory gratuity,” Linton said in an email Friday.

Uber says it doesn’t think the automatic tip is illegal.

“We don’t believe that it is illegal to include a gratuity — which goes entirely to the driver,” said Uber General Manager Rachel Holt. “Uber customers know about the policy before they use our product since information about the tipping policy is on our blog, website and in the email we sent to all customers when we rolled out the product in DC.”

Two other apps for taxi booking, myTaxi and Taxi Magic, don’t charge automatic tips.

“We feel it’s really important to put that actual tipping power in the hands of the user,” said Taxi Magic spokesman Matt Carrington.

But another taxi app startup, HitchRides, does.

“We have found that consumers like the convenience of getting to their destination and simply getting out of the car and getting on with their business,” said the company’s founder, David Miller. “When you have to figure out a tip, it’s an extra step in the process.”

App developers said whether they’re allowed to charge a tip is still a gray area in D.C. law, despite the Taxicab Commission’s pronouncements.

The commission said it won’t be able to do anything about the tips until a rider complains about them, at which point the commission will seek a refund for the rider and fine the driver, Linton said.

Uber ran into trouble with D.C. law last year, when Linton said the company’s sedan service was illegal and performed a sting operation to slap a driver with a $1,000 fine. The D.C. Council since passed legislation allowing the town car service — which charges customers using a blend of taxi and limousine methods — and exempting it and similar sedan services from fare regulation.