Uber Runs Into Legal Trouble In Nevada

Uber, the riding-sharing service that allows consumers with a cell phone to navigate from one destination to another, is once again in trouble with local authorities. Nevada has issued a complaint against Uber, saying that their existence and business model infringes on the “franchise rights of taxi companies and cab drivers.” Bruce Breslow, director of the Nevada Department of Business and Industry, met with Uber prior to their entrance into Nevada. He told reporters he was glad that they were coming, however, Uber then began operating in the state without any regulation. Uber is taking heat from Nevada Deputy Attorney General, Gina Session. Session told the Las Vegas Sun Uber is acting in a manner that she’s never seen before. “I’ve been dealing with regulatory law as a deputy attorney general for more than 20 years, and I’ve never seen a multi-billion dollar company come into Nevada and so aggressively and deliberately disregard the law.”

That law is the requirement for taxi drivers to have a state license. It’s not something that Uber requires of its drivers since they don’t see themselves as a taxi or public transit organization. Rather, they seem to feel that they are connecting people who need rides with those “Uber Partners” who can drive them somewhere. Gina Session also has the impression that Uber looks to public opinion as a means of overcoming state and local laws concerning public transportation services. “Uber’s approach is to start operations in open violation of the law in hope a groundswell of public opinion will override the regulatory concerns,” Session said. “They go to the press and to other local agencies that don’t regulate them.” Uber has run into legal problems in California, Virginia, and Washington, among other states. The concerns are often the same: the lack of a license or infringement with well-established laws and that Uber isn’t subject to the same government regulation that’s attached to taxi drivers.

As an app-based ride-sharing service, Uber is running a foul of long established laws and methods of travel. They are trendy and especially popular among the millennial generation, which is never without their smart phone. In some ways, Uber is similar to Tesla Motors. Tesla is constantly running into legal challenges from dealer groups, which oppose their direct-to-consumer sales model. However, there is one large difference: Tesla appears to be much better at managing their public image. Uber is in the midst of a number of PR miscues, which haven’t helped a company, which is seeking to carve out a reputation amidst back last from long standing organizations. While those PR issues had to do with executives saying the wrong thing, at the wrong place, Uber has also managed to become entangled with subprime auto loans.

As we reported previously, ValleyWag published an in-depth report about how Uber may be encouraging its drivers to take out high-risk subprime auto loans. In the report, the ride-sharing companies’ ads and emails to their “partners”(drivers) were shown. While Uber doesn’t offer loans, they do promote the loans that are available through their auto loan partners. “Partners” is a loose term, because the collaboration may or may not be formal. Two of the auto loan companies whose loans Uber promotes are GM Financial and Santander Consumer USA. What do those two lenders have in common? They both received subpoenas from the Department of Justice in August, seeking information about their subprime lending practices. Uber even offers the opportunity for their drivers to receive lease offers though one of their partnerships programs and have the monthly payment deducted from their Uber earnings. One of the concerns with that concept is whether or not the earnings for an Uber driver are inflated to the point where that person would get a lease, drive for Uber and not be able to either afford to pay for it, or afford to get out of it.

What can dealers make of Uber’s ups and downs? The company does offer partnerships for lease deals, however their organization is meant to make car ownership less necessary as you can just snag a ride with your smartphone instead of getting your own car. Do you think Uber will stand the test of time? Does Uber or Lyft have the capacity to slow down auto sales by promoting ride-sharing in lieu of personalized vehicle purchases?