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How Is Uber Regulated? It Depends Where In D.C. Area You Open The App

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Uber is now permitted to operate legally in Virginia, but Maryland says the tech company must follow the same rules as taxi and limo companies in the state.
Uber is now permitted to operate legally in Virginia, but Maryland says the tech company must follow the same rules as taxi and limo companies in the state.

The ever-shifting personal transportation landscape in the D.C. region is getting shaken up again. Depending on where you open your Uber app to order a ride, the driver who comes to pick you up might be subject to no regulations, some regulations, or the same regulations governing taxicabs — a confusing mix of rules for consumers who just want a cheap, safe trip.

In Virginia

, state officials say the app-based ridesharing companies Uber and Lyft may now operate legally. That puts an end to a cease-and-desist order against the tech startups, but they are required to abide with a series of new regulations. Among the most important: making sure passengers are covered by insurance in the event of a crash.

"Their policies are now primarily liable, so now they are first in line," says Virginia Transportation Secretary Aubrey Layne. He says Uber and Lyft have agreed to provide primary commercial liability insurance.

Who should provide coverage — the rideshare company or the individual driver — has been a contentious issue almost everywhere Uber and Lyft operate. Their drivers, who use their own cars as taxis, carry personal auto policies that usually don't cover commercial activities.

"This insurance issue was of primary concern to us, along with background checks with their drivers," Layne says.

Uber praised the agreement with Virginia. "This really does open up greater access to transportation options in the state, and we are well on our way to a permanent home for Uber there," says company spokesman Taylor Bennett.

In Maryland

, a different ruling: The state's Public Service Commission says Uber must follow the same regulations governing taxi and limousine services in the state. Bennett says that is a step backwards: "We'll appeal and continue to fight for greater options for consumers in Maryland," he says.

Uber argues it's not subject to state regulation because it's a technology company, not a transportation company. Bennett says the Maryland decision prevents Uber from partnering with drivers as independent contractors and instead would make drivers Uber's employees, a more expensive arrangement the company wants to avoid.

In D.C.

, proposed ridesharing regulations are on hold until the D.C. Council returns from its recess in the fall. So right now Uber and Lyft are operating in Washington entirely outside the regulatory landscape that regular taxicabs have to follow.

So what should you the consumer make of all this? Uber is legal in Virginia, operates in D.C. unregulated, and has hit a snag in Maryland.

"These companies just don't care," says Pat Lashinsky, the new CEO of the tech startup Curb. Curb works with regular, regulated taxicabs to let passengers hail rides through its smartphone app, so the company is basically an Uber competitor.

"And the reason why they haven't wanted to abide by the regulation is because the regulation which is good for public policy and is in the public interest is expensive and hard to do," he says.

And that is why the taxicab industry is so angry at the current situation: their competitors call themselves ridesharing but they operate more like private taxis that can charge lower fares because they follow fewer regulations. And those lower fares are drawing away taxicabs' customers.


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