What ridesharing is & what ridesharing is not.
There’s been some confusion in the market recently as a number of apps for hailing taxicab-like services have been making news as they are being prosecuted for violation of local and state laws on commercial transport services. So, what is the difference between these companies and Avego? Why does Avego come under the new definition of ridesharing, and these companies do not?
Firstly, let’s give credit where credit is due. These new transportation apps are great innovations whether they are for hailing taxis (Hailo, Uber, MyTaxi, HopCab, etc) or “peer-to-peer taxi services”(Lyft, Sidecar, UberX) which allow regular people to use their cars as taxis. Unfortunately, even though neither type of service is “ridesharing”, they refer to themselves as such. This is where the confusion arises over whether or not “ridesharing” is legal.
These peer-to-peer taxi services take regular people with regular cars and and convert them into neo-taxi drivers, picking people up wherever they are, taking them wherever they want, at rates competitive to taxi services. They hide behind the cloak of seeking “donations” for their commercially offered rides, even though drivers of these services are most often working at least half-time, in their own words, up to $1,500 of “tax-free” income per week.
Unfortunately, this is not true. The money they are earning should not be tax free (although the drivers are led to believe so). In the same vein, the private insurance covering their vehicle as they drive is invalidated as they are using their vehicle for commercial purposes. No wonder these services received Cease-and-Desist Orders in California.
People who don’t realize the difference between ridesharing and peer-to-peer taxi services run the risk of committing tax fraud (if they don’t report their income) and insurance fraud (if they use their vehicle for commercial services while not having commercial insurance). Never mind that they won’t be able to rely on their insurance in the event the get into an accident.
The difference between these companies and Avego is vast. Firstly, Avego drivers offer rides to people along the route they already plan to travel. The driver would take this trip anyway and brings a rider along to share the cost. Secondly, the charge to the rider is well below the commercial rates charged by peer-to-peer taxi services (compare a one mile Sidecar or Lyft trip in San Francisco at $9 to $1 with Avego for the same distance).
Additionally, the Avego driver never receives more than $0.55/mile, which is below the IRS travel reimbursement rate.
That said, there is progress here for the taxicab industry, and it’s good to see that these companies are apparently attempting to get around the insurance issues that will plague any driver who tries to offer commercial services. However, there needs to be a line drawn between peer-to-peer taxi services and legitimate ridesharing. Innovation is welcome, but if it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck. These are clearly taxis.