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ABA Journal

Internet car companies offer convenience, but lawyers see caution signs

Posted Jan 10, 2014 7:19 PM CDT
By Stephanie Francis Ward

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Kristin Sverchek: "What we're really doing is acting as an intermediary, allowing two individuals to connect." Photo by Norbert Von der Groben.

Want to get a car ride just by pressing an app icon? New businesses like Lyft, Uber and Sidecar match drivers and passengers via smartphone technology. They claim they can get vehicles to your door in minutes.

Unlike taxicabs and limousines, the companies don’t see themselves as common carriers, and most do not seek regulatory licensing traditionally required for such services. Payments—that is, if you actually decide to pay—are made through the apps, and the businesses take a varying percentage of fares. For example, Lyft, whose cars are known to carry furry pink mustaches on the front grille, takes “donations.” Sidecar lets passengers pay what they want.

Yet the convenience might come at a price, according to lawyers who’ve been watching the services. The businesses don’t consider the drivers as employees, and when asked about liability in an accident, the companies instead cite insurance policies that drivers carry. Such policies usually cover up to $1 million per accident. But in serious accidents with multiple parties, some say, even $1 million won’t go far.

Drivers with Sidecar and Lyft must pass background checks, the companies’ in-house lawyers say, and they don’t need commercial driver’s licenses. A Lyft driver must be at least 23 years old, have insurance and a smartphone to use the Lyft app, and own a car no older than a 2000 model.

Lyft considers itself an Internet site and claims it is protected from liability in the event of an accident under Section 230 of the Communications Decency Act, says company general counsel Kristin Sverchek, a San Francisco lawyer. The 1996 law holds that no provider or user of an interactive computer service can be treated as the publisher or speaker of information provided by another “information content provider.”

An Uber representative says the company also sees itself as a technology company that connects riders with “high-quality transportation providers.”

Click here to read the rest of "App’ Me a Ride" from the January issue of the ABA Journal or to comment on this story.

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