In Fort Worth, Texas, the city government has decided to "even the playing field" by reducing regulations on both ride-sharing companies and the taxicab industry.
(TNS) -- Fort Worth has joined Dallas in loosening the rules for ride-share companies.
A week ago, the Fort Worth City Council decided that the city won't screen drivers or inspect cars used by app-based and taxicab companies. Instead, it will make the companies vouch for themselves.
"Unlike other cities that have gotten so hung up in the 'hot potato' of the politics on this, Fort Worth is going to do it the right way," Mayor Betsy Price said.
She means cities like Austin, where a bitter and expensive political fight over whether to require fingerprint-based background checks drove Uber and Lyft out of the city in May.
Dallas officials praised Fort Worth's policy, saying it was similar to theirs.
"The idea was that we would level the playing field and that the ones that would be successful would be the ones that offered the best service at the best price," said Dallas City Council member Sandy Greyson.
In Fort Worth, companies will have to pay a $500 fee for an operating license valid for two years and submit a "compliance certification" annually. By signing the document, companies certify that they have conducted national background checks on their drivers, inspected their vehicles and paid for the required insurance.
Basically, all the companies have to do to get a license is register with the city.
Is this the best approach for consumers? It depends on whom you ask, but here are six things to consider:
Companies doing business in Fort Worth will be on the honor system, said city spokeswoman Cindy Vasquez.
Taxi operators have criticized Fort Worth's policy, citing safety concerns.
"Drivers are going to go around that cannot get in with the major company because they are doing background checks," Yellow Cab owner Jack Bewley told the council. "They're just going to pre-empt the system ... and then they can drive because they're certifying for themselves."
Since Fort Worth won't be asking for supporting documentation when it accepts companies' compliance certification, it's possible that a person or company that lies about meeting the requirements gets a license. A misrepresentation likely wouldn't be revealed until there's a problem, like a car wreck.
But even in the absence of strict rules, companies have their reputations to think about, said economist Russ Roberts, a research fellow for the Hoover Institution public policy think tank at Stanford University and host of the podcast EconTalk.
"You can get away any one time, but each time you do it, you degrade your name a little bit," Roberts said.
Search online for Uber, Lyft or taxi companies and you'll find complaints of rape and other criminal behavior.
There appears to be no reliable way of telling whether cab or app-based rides are safer. Police and transportation authorities told The Associated Press that they know of no rigorous comparison of cabbies and Uber drivers.
Uber and Lyft point to their apps, which let passengers share their location and give feedback about drivers.
Still, the rise of app-based cars for hire has cities wrestling with how to protect customers. Some, like Austin, pushed for fingerprint-based background checks, which are the kind typically used by taxi companies. But Uber and Lyft prefer a faster check that screens drivers using their license and Social Security numbers.
Like Fort Worth, Dallas puts the onus on ride-hailing companies to conduct their own background checks.
However, Dallas requires that the private background check company meet standards set by the National Association of Professional Background Screeners. The city also asks for audit numbers for the drivers and randomly checks some of them, said Melissa Miles, executive assistant city attorney for Dallas.
There's one regulation involving car-for-hire companies in Texas that's not up to cities to decide: insurance.
Like Dallas had done earlier, state lawmakers passed legislation in 2015 requiring two tiers of insurance coverage.
When Uber and Lyft drivers are accepting passengers but not carrying any, they must have 50/100/25 coverage: $50,000 per injured person, $100,000 per wreck and $25,000 for property damage. That's more than the minimum insurance required of Texas drivers, which is 30/60/25.
But when Uber and Lyft drivers are giving a ride, their insurance must provide up to $1 million in liability protection.
Research by the Texas A&M Transportation Institute shows that most states in the U.S. now have at least one law on the books regarding car-for-hire businesses like Uber and Lyft.
Many of the states are imposing rules about insurance.
It's better for consumers when Uber and Lyft compete with cabs "on equal footing" regarding safety and insurance and without fare or route restrictions, according to a poll of 40 economists by the University of Chicago.
Yet schedules restricting cab fares remain deeply rooted across the country, while Uber and Lyft can set their own prices.
Cab fares are regulated because taxi companies traditionally had a monopoly on private transportation for hire, so there was an attempt by governments to protect the consumer, said Roberts, the Stanford economist.
Some cities also limit their cab fleets through a medallion system, driving the cost of a license to figures exceeding $200,000 in places like Chicago.
Dallas and Fort Worth don't have a ceiling on the number of cabs that may operate in their borders, but they've kept their cab fare schedules even as they've loosened other rules.
Greyson, the Dallas council member, said the city considered getting rid of the fare system when it developed its rules in 2014. But there was push-back from members of the tourism industry, Greyson said.
For example, airport officials worried that allowing cabs to set their own fares would create gridlock because passengers would shop around by going from car to car to check prices, Greyson said.
"They just felt like it would be too confusing and it would really slow things down," she said.
With Uber and Lyft gone, people in Austin got inventive to get around.
Within days of the companies' departure, some drivers posted their cellphone numbers on social media to offer rides directly, and informal Facebook groups popped up to help passengers find drivers, the Austin American-Statesman reported.
One of these is Arcade City, which calls itself an "open marketplace" that lets drivers connect directly with passengers and set their own rates. It's developing an app.
A memo by Austin's transportation director suggests the city could be tweaking its rules again later this year to align taxi companies with their app-pased rivals and provide "a truly competitive marketplace."
Stay tuned for the 2017 Texas legislative session, when lawmakers may resume a discussion about what to do with Uber, Lyft and their peers.
The Senate's chief transportation official prefers statewide rules. The Texas House's top transportation lawmaker wants cities to decide their own regulations.
Still, the state at some point might have to regulate app-based companies for minimal standards, said state Rep. Joe Pickett, D-El Paso, chairman of the House Committee on Transportation.
"If the state does anything, I hope it's nothing more than a range of background checks that are sufficient," he said Tuesday.
State Rep.Matt Krause, R-Fort Worth, applauded his city's new policy.
"It's the best approach to take," he said.
©2016 The Dallas Morning News Distributed by Tribune Content Agency, LLC.