Cab companies, ridesharing services battle for passengers

July 17--Leaving Pearl Street Grill one recent afternoon, a woman in need of a ride texted the restaurant's address to Liberty Cab. Within seconds, she received a reply, with the name of the driver, the number of the taxi and the distance away: four-tenths of a mile.

The taxi, a large American-made sedan in good condition, arrived four minutes after the text was sent.

The cab dropped off the woman 19 minutes later at a coffee shop on Hertel Avenue, and the bill came to $23.80 before tip, Then the passenger swiped her credit card on a machine facing the back seat.

Back at Pearl Street Grill, another rider took out her phone, tapped an app for Lyft, a new ridesharing service in town, and the app immediately let her know the nearest driver was 12 minutes away.

Exactly 12 minutes later, a BMW in good condition showed up and took her to the same coffee shop on Hertel Avenue. The driver was talkative and friendly, and offered the rider a package of mints. She arrived at the coffee shop 16 minutes later. The Lyft app suggested a "donation" of $21, before a tip.

After she got out of the car, she paid on her phone and rated her driver on a five-star scale, which determines whether she is matched up with the same driver again.

Lyft started in Buffalo in April, and the state is trying to shut down the service, saying it violates several laws governing for-hire transportation and insurance.

Cab companies are hoping the state is successful.

Lyft and other ridesharing services have popped up in cities across the country as a low-cost alternative to cabs and liveries, allowing people with cars to make extra money or subsidize the cost of owning the car. Lyft stresses camaraderie between riders and drivers, and cars bear a fuzzy pink moustache on the grill. The company's slogan is "your friend with a car" and encourages riders to sit in the front seat.

Lyft is especially popular among young people and college students, and advertises heavily on social media.

Taxi drivers in Buffalo and elsewhere have fought Lyft and a similar service, UberX, arguing that they operate like cabs without following the same regulations or paying insurance costs.

"My drivers are legal, the cars are insured properly," said Bill Yuhnke, president of Liberty and Yellow Cab. "It's run like the old Wild West, and they don't need anything."

For the rider, the cost difference between taxis and Lyft is dramatic in some cities, although not in Buffalo. A comparison of the taxi's rates and Lyft's rates for Buffalo do not show a big difference, and in one experiment, a Lyft ride from a North Buffalo commercial strip to downtown cost more than a taxi ride from downtown to the same North Buffalo business. However, Lyft runs promotions that offer new users free rides.

Regulators in municipalities from Austin to Miami to Pittsburgh have performed stings to catch drivers, fined the companies thousands of dollars and outright banned them. Insurance departments in 18 states have issued advisories, warning riders about the potential risks of using Lyft or UberX, which has begun to recruit drivers in Buffalo.

In New York State, the Attorney General's Office said last week it is seeking to shut down the service until it comes into compliance with state law. A State Supreme Court justice has allowed the service to operate until the company and state lawyers meet in court Friday..

Why riders use Lyft

Lyft promises service around the clock, every day, around the city and in towns as far as Lewiston and Lockport to the north and Eden to the south. Because it allows drivers to set their own hours, there are times that drivers are not available. The ridesharing service is "on demand," meaning riders request rides as they need them, and pre-arranging a ride is not possible.

But riders noted that in outlying areas, Lyft cars can be more readily available than taxis, which is why they prefer the service.

Michael Mazzarella, 24, recently used Lyft to get from East Amherst to Elmwood Avenue. The nearest cab would have taken 30 to 40 minutes to get to him, and Lyft took only 15 minutes.

"It was really quick," said Mazzarella, a University at Buffalo student. "You can also see where the car is on the app, so you can see when he gets there."

Lyft began in San Francisco in 2012 and now operates in 65 cities, attracting internet-savvy riders who have had bad experiences in a taxi or like the ease of requesting a ride.

"When I first heard about it, I was really hesitant," said Erin Seeney, 23. "I was like, 'I'm going to get into a stranger's car? That sounds like a good way to lose an organ.' "

Seeney, a student at SUNY Buffalo State, now uses Lyft on the weekends when she is out with friends. She likes that the drivers are doing it because they want to and appreciates the occasional cookies and water bottles the drivers provide.

Brendon Muck, 34, used Lyft when he was leaving a house party at about 1 a.m. in Clarence recently.

"You don't have to worry about cash," said Muck, who works in information technology. "The driver was friendly and personable, and I like that you can rate them."

Taxis vs. Lyft

Taxi companies, though, are no fans of the service. They have pointed out that Lyft only takes customers who have smartphones and credit cards, excluding many low-income passengers.

"They want the cream of the crop, but they're not looking at the full market to service the full community," Yuhnke said.

In fact, Lyft drivers are matched up with riders, and if the driver has rated a passenger at three stars or below on a previous trip, the driver will never again be matched with that rider. The same is true for passengers who rate drivers at three stars or below. Drivers can also adjust their settings so if a rider has paid them less than the suggested donation, they won't be matched with that rider again.

Lyft also charges riders a cancellation fee of $5, unlike taxis.

One of the big differences is the cost to the taxi companies.

Insurance for a taxi can be around $5,000, while the average personal policy in New York State is just under $1,100. The meter that taxis use is $350, and a computer system that allows credit card payments is about $650, Yuhnke said.

Taxi and livery drivers who pick up passengers for hire in New York State must have a Class E driver's license, something Lyft drivers do not have.

They also must undergo background checks by the city, at a cost of $10, and get a hacker's license from the city, another $40.

Taxis and livery cars are also inspected by the city every year. To drive a livery car in Buffalo, which takes passengers for hire in pre-arranged rides, permits are $75 per year. Taxis, which are hailed on the street, pay $115.

"There's a lot to driving a doggone cab," said Cheryl Cochrane, who lives on the West Side and has been driving for Liberty Cab for close to 25 years.

She wonders how Lyft can advertise to potential drivers that they will earn $30 an hour or $500 a weekend.

"There ain't enough business now, as it is," she said.

Though the city has no record or review of Lyft drivers, the company screens drivers with checks of their driving record and criminal background.

A Lyft mentor checks a new driver's car for safety and cleanliness, and rides with the driver to see how they drive.

Driver Jennifer Torres, a student at Erie Community College, said she likes meeting new people and has made several friends since she started driving in April.

"The experience has been excellent so far," she said. "I think all around it's a great service."

Buffalo takes a stand

The city views ridesharing as illegal, and the Police Department said it plans to ticket Lyft drivers.

North Council Member Joseph Golombek is taking a lead at City Hall, but enacting ordinances that would allow Lyft to operate wasn't possible because so many state regulations are involved, he said.

"If they can't fulfill the state issues, they can't get a taxicab license, and that's a city issue," Golombek said.

One Lyft driver paid $225 to cover three violations issued in May while dropping off a passenger at Buffalo Niagara International Airport: not having vehicle-for-hire insurance, not having a driver's license that allows for for-hire operation and improper registration.

Lyft's operations "violate a host of laws," according to the state Department of Financial Services.

The insurance industry has also not been enthused about transportation network companies.

According to Lyft, its $1 million commercial liability policy covers riders and drivers, and acts as a driver's personal policy, while they are matched on the app.

However, the insurer, James River, is not licensed to do insurance business in New York State.

Lyft's operations expose drivers and the private auto insurance market to "intolerable risk, cost and uncertainty," according to Benjamin M. Lawsky, superintendent of the Department of Financial Services.

Three dozen Lyft drivers have had their policies canceled across the country once their insurer found out they were driving for Lyft, according to the state's legal papers.

The Lyft terms of service, which riders must agree to before they can use the app, states that every driver must have a valid policy of liability insurance for the operation of their vehicle "to cover any anticipated losses related to such Driver's provision of rides to Riders."

The terms go on to say that each driver is "solely responsible for any and all liability that results from or is alleged as a result of the operation of the vehicle such Driver uses to transport Riders, including, but not limited to personal injuries, death and property damages."

Lyft maintains that its insurance policies have responded as they were designed to and that "because of Lyft's rigorous background and driving record checks and driving rating system, Lyft drivers are among the safest on the road, anywhere."

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