The Virginia Department of Motor Vehicles sent cease-and-desist orders Thursday to Lyft and Uber, telling the two taxi-like services they must stop operating in violation of state law or face fines against their drivers.
The two companies are on the leading edge of a trend in which smartphone apps are used to connect passengers with drivers using their personal vehicles, often as a side job. They also are often at odds with governments across the country as states and cities try to figure out how to regulate them.
The order signaled that state officials' patience had worn thin with Lyft and Uber, each of which continues to provide service in Hampton Roads after being fined this spring. It also showed a shift in tactics: Rather than fining only the companies again, the DMV is now threatening civil penalties that could reach as high as $1,000 per violation against the drivers themselves.
The DMV is studying Virginia's motor carrier laws with an eye toward legislative changes next year that could allow such companies to legally operate in the state. Secretary of Transportation Aubrey Layne said last week that he has spoken to representatives from Lyft and Uber and likes their business models.
But until the law is changed, they are violating it, Layne said.
"I actually like their business model in terms of giving more flexibility to the public, but there are some issues they need to work on and some laws that we need to change," he said.
Paige Thelen, a spokeswoman for Lyft, relayed a statement from the company by email that extolled the service it provides but did not say whether it intended to comply with the DMV order. The mobile apps for Lyft and Uber showed several drivers available for a ride Thursday afternoon in Hampton Roads.
The statement from Lyft noted that many taxi and limousine regulations pre-date its business model. It said the company is committed to working with state officials "to craft new rules for this new industry."
A statement from Uber Technologies Inc. called the DMV order "shocking and unexpected" and said it hurts those who have been using Uber to make a living and those who rely on it for transportation. The company said it has been working in good faith with the DMV on creating a regulatory framework for its service and looks forward to continuing that effort.
In the cease-and-desist letters, DMV Commissioner Richard Holcomb told representatives for both companies that he is "once again making clear" that they must stop operating in Virginia until they get the proper authority.
Holcomb wrote that he "strongly" suggested the companies focus their resources on participating in the state's study "rather than continue illegal operations in the meantime."
Lyft and Uber expanded into Hampton Roads this spring. Each was assessed a civil penalty in April by the DMV - $26,000 for Uber and $9,000 for Lyft - for trips their drivers provided in Virginia despite warnings that their for-hire business models violated state law. Both companies have appealed the penalties, according to the DMV.
Holcomb told the companies to alert their drivers in Virginia that the DMV will be enforcing its existing laws. The agency could still assess additional civil penalties to the companies as well, according to an agency spokeswoman.
Along with the cease-and-desist orders, the DMV on Thursday told the public to research any ride service and learn about its insurance coverage, vehicle maintenance and driver screening process before using it. It pointed people to a list on its website at www.dmvNOW.com/knowyourride, where users can search for a company to see whether it is registered and insured under state regulations.
Neither Lyft nor Uber is on the approved list.
The DMV notice encouraged passengers of for-hire services to ask in advance about any additional charges for tips, vehicle cleaning, mileage and fuel. It added that "many legitimate transportation companies" have incorporated phone apps, social media and other newer technology into their service.
©2014 The Virginian-Pilot (Norfolk, Va.)