New York Hits Lyft With Cease-and-Desist Order

By Catherine Yang
Catherine Yang
Catherine Yang
July 10, 2014 Updated: July 10, 2014

Ride-sharing startup Lyft was sent a cease-and-desist letter by state Department of Financial Services, according to a letter obtained by Crain’s New York Business.

On July 7, Lyft met with New York City’s Taxi and Limousine Commission about launching in the city, but has decided to proceed without following TLC regulations. On Friday 7 p.m., Lyft’s fleet of 500 will launch in Brooklyn and Queens. 

In April, San Francisco-based Lyft began operating in Rochester and Buffalo without approval. 

“Lyft’s ongoing law violations will not be tolerated and must halt,” wrote Benjamin Lawsky, superintendent of Financial Services, to Lyft CEO Logan Green.

Lawsky accused Lyft of acting in bad faith by concealing plans to operate in NYC from DFS. In a meeting with DFS officials on June 5, Lyft representatives said there were no imminent plans to launch in NYC. 

Lawsky says Lyft has violated several insurance laws, including illegally acting as an insurance provider and soliciting New York drivers. Lyft has also refused to provide DFS a copy of their insurance policy. 

On Wednesday, July 9, TLC put out a notice telling passengers not to ride Lyft because the drivers have not undergone the safety and training procedures TLC’s licensed drivers are required to. TLC currently requires 24 hours of training, which will soon increase to 40 hours.

Lyft drivers have been screened and are required to complete two hours of training. According to Lyft they have also undergone strict background checks and vehicle inspections, and the insurance coverage is for $1 million.

Lyft has professed that because it is not a for-hire car service, these regulations should not apply. Uber, for instance, functions like a for-hire livery cab service in the city and does comply by TLC’s regulations. 

Instead, Lyft brands itself as a friendly car-pool service. In some markets, the fees are donations. Payments can be made anywhere within a 24-hour period. 

According to Lyft’s NYC launch blog post, 75,000 New Yorkers have already opened their app. 

“Brooklyn and Queens are vastly underserved by public transit options compared to the rest of New York City,” Lyft’s blog reads. “In fact, just one of New York’s 23 subway lines passes solely between boroughs, and 95% of taxi pickups happen in Manhattan or a local airport.”

The service is offering two weeks of free rides to celebrate its launch.