New York attorney general sues to stop Lyft launch

lyft nyc

New York continues to be a stumbling block for sharing economy companies. First Airbnb had to hand over host data to the state attorney general, then Uber had to change its surge-pricing policy, and now New York Attorney General Eric Schneiderman is suing to keep ride-sharing app Lyft from operating in NYC.

lyft bk

When you open Lyft in Brooklyn, the company urges you to sign a petition of support.

Lyft plans to roll out service with 500 drivers in Brooklyn and Queens on Friday night, but now the company is facing a temporary restraining order and an injunction that would keep it from operating in New York altogether. Schneiderman and Superintendent of Financial Services Benjamin Lawsky filed suit Friday in Manhattan, claiming that Lyft is violating state law. The company also has operations in Buffalo and Rochester.

“As it has done in every other city in which it operates, [the] defendant has simply waltzed into New York and set up shop while defying every law passed whose very purpose is to protect the people of the state of New York,” said the filing obtained by Capital New York. “Despite being warned and told to cease and desist by three separate regulatory and enforcement agencies, defendant has thumbed its nose at the law and continued with its plan to launch in what could become its largest market.”

The New York Taxi and Limousine Commission has also condemned Lyft’s launch.

Ride-sharing rules and regulations

According to regulators, Lyft is a taxi service that isn’t licensed to do business in New York and hasn’t complied with commercial licensing and inspection requirements.

lyft redesign

Lyft redesigned its app in advance of the big launch.

“Lyft believes that because it markets its service though a smartphone application and calls its fares ‘donations’ it is above the law,” the filing continues. “Despite the well-established, long-standing public policy behind licensing and insurance, it attempts to substitute its own judgment for that of the legislature, and forges ahead.”

Lyft has claimed that its inspection and insurance requirements are far more stringent than those required by the state, and, as always, the company says it is a technology platform connecting drivers and riders. It looks as if Lyft is proceeding with its launch in NYC as planned: The company has a kick-off party planned in Brooklyn on Friday night with a performance from QTip, Reddit founder Alexis Ohanian will be driving around the borough offering rides, and all lifts are free for the first two weeks.

The launch first, ask questions later playbook that many sharing economy companies follow hasn’t had much success in New York, but if Lyft’s ride-sharing model is approved by regulators, Uber is waiting in the wings to offer its own version. Right now, Uber only uses taxi commission-approved drivers on its low-cost UberX service, instead of average folks with their own cars.

Update: According to Bloomberg, Attorney General Schneiderman has been successful in stopping Lyft, at least for now. The company has pushed its launch til July 14.

Update 2, 3:50pm: A post on Lyft's official blog claims there was no actual injunction issued in court today, since the company agreed to postpone the launch until Monday. It reads, in part: "Today we agreed in New York State Supreme Court to put off the launch of Lyft's peer-to-peer model in New York City and we will not proceed with this model unless it complies with New York City Taxi and Limousine regulations. We will meet with the TLC beginning Monday to work on a new version of Lyft that is fully-licensed by the TLC, and we will launch immediately upon the TLC's approval."

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