SAN FRANCISCO (CBS SF) -- San Francisco is putting the brakes on a mobile app that allows drivers to auction off their choice public parking spots to the highest bidder.
City Attorney Dennis Herrera Monday issued a cease-and-desist demand to Rome, Italy-based startup Monkey Parking and CEO Paolo Dobrowolny.
Herrera also sent a request to the legal department of Apple Inc. to immediately remove the mobile application from its App Store because Herrera said it violates Apple's own guidelines on legal requirements for apps.
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The Monkey Parking app was launched in April and shortly after the city attorney's office said it would investigate whether the business model of profiting off a public space was legal.
In Monday's demand, Herrera cited a provision of San Francisco's police code "that specifically prohibits individuals and companies from buying, selling or leasing public on‐street parking."
Herrara said if Monkey Parking continues to operate past July 11, it would face a lawsuit under California's strict Unfair Competition Law and civil penalties up to $2,500 per violation.
Drivers who use the app also face a $300 fine each time they use the app, Herrera said.
Two other startups that allegedly violate state law concerning sales of parking spaces, Sweetch and ParkModo, will also receive cease-and-desist orders from the city attorney this week, according to Herrera's office.
Sweetch charges a $5 flat fee for users to switch out of a parking spot, and refunds $4 to drivers who successfully find someone to take their spot.
Motorists can choose to donate the refund to charity, including the Foundation for Sustainable Development and Bayes Impact, according to the company's website.
On the website, Sweetch says it helps the environment and eases congestion by shortening the amount of time spent searching for a parking spot.
ParkModo -- set to launch this week, according to Herrera's office -- is planning to hire drivers for $13 an hour to occupy parking spots in the Mission District and then sell the spots through an app.
On the company's website, which states it is testing its services in San Francisco, Chicago and New York, there is an offer to be one of the first 1,000 people to download the app to receive $5 toward parking credit.
In an email this morning from Dobrowolny, co-founder and CEO of MonkeyParking, he said he was still talking with his legal department about the letter and was not able to comment on the cease-and-desist order.
He added, "As a general principle we believe that a new company providing value to people should be regulated and not banned. This applies also to companies like Airbnb, Uber and Lyft that are continuously facing difficulties while delivering something that makes users happy. Regulation is fundamental in driving innovation, while banning is just stopping it."
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