Wanna Lyft in NYC? Better try a cab

The car-sharing app Lyft, intended to connect people who need a ride with those who can give one, is being sued by New York's attorney general on the eve of the service launching in New York City.

Attorney General Eric Schneiderman filed the lawsuit on Friday seeking to halt Lyft before it gets going in the city. He's alleging the service is operating illegally by avoiding the consumer protections put into place that regulate the taxi and limousine industry.

"As it has done in every city in which it operates, defendant has simply waltzed into New York and set up shop while defying every law whose purpose is to protect the people of the state of New York," the state says in its request for a restraining order.

The city's Taxi & Limousine Commission a day earlier issued a warning (pdf) that Lyft was operating without authorization. Among the issues that New York officials say they have with Lyft is that its drivers aren't regulated and lack commercial insurance.

Lyft is operating in more than two dozen states and Washington, D.C. Uber, another ride-sharing service, ran into a similar bump in the road with a lawsuit in Seattle filed by taxi drivers.

Lyft has tried to make the ride-sharing service appear different from traditional car services, positioning it as a way individuals can make extra money with their cars while those who need a lift can get one quickly through their smartphones. Payment for the rides, done through stored credit cards, is considered a "donation." The state contends that Lyft cannot claim to be anything other than a taxi service using new technology.

In a statement distributed to the media, a Lyft spokeswoman said: "We are in a legal process with local regulators today and will proceed accordingly. We always seek to work collaboratively with leaders in the interests of public safety and the community, as we've done successfully in cities and states across the country, and hope to find a path forward for ridesharing in New York. "

Lyft co-founder John Zimmer told CBS News' Jeff Glor the app is way to help people offset the steep costs of owning a car.

"The car used to be a symbol of freedom in America," he said, "and I think now it's an extreme burden to own a car and to operate a car, and that comes in the form of parking; that comes in the form of traffic; that comes in the form of expenses and maintenance and insurance. And so, when you can provide a service that eliminates all those things, it's a very exciting proposition."

  • Mitch Lipka On Twitter» On Facebook»

    Mitch Lipka is an award-winning consumer columnist. He was in charge of consumer news for AOL's personal finance site and was a senior editor at Consumer Reports. He was also a reporter for The Philadelphia Inquirer and the South Florida Sun-Sentinel, among other publications.

Comments

Market Data

Market News

Stock Watchlist