Lyft and Uber Get Banned from Virginia

For once, Uber and Lyft are going to need to work together for a common goal. Both car services were banned in Virginia by the Department of Motor Vehicles this week.

For once, Uber and Lyft are going to need to work together for a common goal. Both car services were banned in Virginia by the Department of Motor Vehicles this week. The cease and desist ordered the California-based transportation startups to stop "operating in Virginia until it obtains proper authority." The DMV also threatened to fine the drivers if operations continue.

Uber, Lyft and other similar app-based car services face major push back from traditional yellow cabs and black livery vehicles. These groups are well established and often have powerful lobbyists, pushing their desires through to the local government. Regardless, Uber and Lyft have managed to build a major following in most major cities. Uber has been so successful it just managed to earn a WhatsApp style $18.2-billion valuation.

Uber and Lyft are both planning to fight this battle. Uber issued this statement:

The DMV’s actions today are shocking and unexpected. Uber has been providing Virginians with safe, affordable and reliable transportation options for months and has continued to work in good faith with the DMV to create a regulatory framework for ridesharing. The DMV decision today hurts thousands of small business entrepreneurs who rely on the Uber platform to make a living, create new jobs and contribute to the economy — and it hurts the countless residents who rely on Uber to connect them with affordable, safe and reliable transportation alternatives. We look forward to continuing to work with the Virginia DMV to find a permanent home for ridesharing in the commonwealth.

Lyft had similar things to say:

Current regulations surrounding taxis and limos were created before anything like Lyft's peer-to-peer model was ever imagined, we're committed to continuing to work with state officials to craft new rules for this new industry."

Lyft's statement points to the root of the issue: regulators are treating Uber and Lyft like traditional car services, and may even force them to purchase expensive medallions and comply with strict regulations. Uber is technically not a car service, as noted on their website. They are a technology company that offers an app, connecting people that can legally offer rides with people that want to pay for them. They process the payment. There has been a lot of contention over whether this makes apps that provide this car service an actual a "car service."

The state of Virginia is using their existing taxi and livery laws to determine where Uber and Lyft fit. They determined that, well ... they don't. Of course they don't because those laws were written before the companies and apps like this existed.

Virginia DMV spokesperson Sunni Blevins Brown issued this statement:

Our goal is compliance. We have been communicating with these companies for months (going back to December of last year) to educate company leaders on Virginia law. The study underway right now may result in an option outside of what’s currently available, but in the meantime, DMV is enforcing the law as instructed, which does not allow these companies to operate legally in Virginia without proper authority.”

In New York state, Attorney General Eric Schneiderman has been investigating Uber for price gouging during Hurricane Sandy. However, this investigation has not interfered with Uber's operations. Perhaps Virginia should have looked to their northern neighbors to see how a study can be conducted without disrupting a statewide business.

California and Colorado have already passed laws to regulate Uber-style car services, though it is unclear how long Virginia's "study" to determine these laws will take.

For now, police officers will be issuing tickets to operating Lyft and Uber drivers. It will be interesting to see if drunk driving arrests and accidents increase when Virginians looking for a night out choose to drive instead of e-ordering a cab. They could always use a local pre-existing car service instead. They are likely thrilled by this ban.