Criminal Charges Possible Against Uber Drivers, State Agency Says

July 16, 2014

Investigative Reports

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UberOn June 17, George Parker, a law enforcement officer with the state Office of Regulatory Staff, attended a meeting in Columbia aimed at recruiting drivers for UberX, a popular smartphone-app, ridesharing business that launched Thursday in the Capital City, Charleston, Greenville and Myrtle Beach.

Parker, an ORS transportation program manager, said he went to the event at the SpringHill Suites by Marriott hotel on Lady Street to “obtain information for ORS regarding the driver/partner recruitment process for Uber,” according to a sworn affidavit submitted by him.

What Parker didn’t say in his affidavit, filed with the S.C. Public Service Commission, was that ORS representatives apparently weren’t welcome at the event.

“We ended up speaking, and a ruckus ensued, and we were asked not to come back to any of those meetings, and we were shown the door,” Dawn Hipp, director of ORS’ Office of Transportation, Water/Wastewater and Consumer Services, told The Nerve when contacted this week.

Hipp says Parker, who is authorized under state law to carry a gun and make arrests, wasn’t acting undercover at the time, noting, “He just walked in there …  The company (earlier) had said, ‘We would be willing to work with you.’”

But given that ORS and Uber representatives had been talking since March but had not reached any agreement by early June, according to Hipp, the hotel incident likely escalated tensions.

As it stands now, ORS contends that Uber Technologies Inc., a San Francisco-based company founded in 2009 that provides smartphone-app ridesharing services to more than 100 cities worldwide, is breaking South Carolina law, Hipp said.

The state agency, whose mission, its website says, is to “represent the public interest in utility regulation for the major utility industries,” has asked the S.C. Public Service Commission to decide whether Uber and its “partner drivers” are “motor vehicle carriers” under state law, which, if so, would require the company to comply with regulations for that group.

In a petition filed June 24 with the commission – a week after the Columbia hotel incident – ORS alleged that Uber has “failed to provide to the Commission or ORS any evidence of compliance with the Commission’s driver and vehicle safety requirements,” and that “such transportation may take place on or be provided by uncertificated, non-placarded and potentially uninsured/underinsured drivers.”

A public hearing is scheduled for Aug. 26.

Hipp told The Nerve that the position of ORS is that Uber and its drivers can’t legally operate in South Carolina without a state “Class C” certificate, which she noted is required of taxicab companies. As of the end of June, there were 423 taxi certificate holders covering approximately 1,300 registered vehicles statewide, she said.

“We really would like for them (Uber) to come into compliance,” Hipp said.

Criminal Penalties

Under state law (Section 58-23-80 of the S.C. Code of Laws), anyone “operating as a passenger carrier” without a required state certificate is guilty of a criminal misdemeanor, punishable by a minimum $100 fine for the first offense, a $500 minimum fine for a second offense, and a $1,000 minimum fine and/or a maximum 30 days in jail for third and subsequent offenses. With various court fees added, the total penalty for a first offense would come to $262.50, Hipp said.

State law defines a motor vehicle carrier as “every corporation or person, their lessees, trustees or receivers, owning, controlling, operating or managing any motor propelled vehicle, not usually operated on or over rails, used in the business of transporting persons or property for compensation over any improved public highway in this State.”

So far, ORS has issued no citations under the state law, Hipp said. She acknowledged that besides Parker, her division has only three inspectors, based in Columbia, Saluda and Orangeburg, for the entire state. Local, county and state police agencies also have jurisdiction to enforce that law, she said, though she added she’s aware of no citations issued by those agencies to Uber drivers.

Asked if ORS plans to ask police agencies to enforce the law, Hipp replied: “We have not taken that step. We have networked with the city (of Columbia) and airport authority to make them aware of what Uber is doing, but we have not requested other state law enforcement agencies to write citations.”

But a week after the June 17 Columbia hotel incident, ORS posted a consumer advisory on its website, though it didn’t name Uber.

“Ridesharing smartphone apps are a new technology that sparks interest in South Carolina,” the advisory stated. “Before you hit the road with a swipe of your finger, the Office of Regulatory Staff (ORS) advises you to be aware of potential safety and insurance issues that could affect both customers and drivers participating in ridesharing services.”

“Using ridesharing companies or drivers without a PSC certificate may leave customers and drivers vulnerable to potential gaps in insurance coverage,” the advisory warned.

The PSC certificate “indicates the individual or corporation has met state-mandated standards for insurance and has been inspected by the ORS,” the advisory said.

‘Overwhelming Positive Support’

The Nerve this week sent written questions to Uber representatives seeking comment, among other things, about ORS’ contention that the company is breaking state law. Uber spokesman Taylor Bennett issued the following prepared statement Tuesday afternoon, which reads in part:

“Uber is a technology company – not a transportation company. We do not hire drivers and we do not own vehicles. We provide a technology platform that connects riders to drivers with the safest ride on the road.

“In South Carolina, we’ve received overwhelming positive support from riders who are excited for access to safe, affordable and reliable transportation alternatives, and from drivers who rely on the increased economic opportunities and flexibility Uber provides.

“Many current taxi and limo regulations were developed during a time when the ubiquity of cell phones – let alone smartphone apps – was never imagined. … We look forward to continuing to work with city and state officials to modernize regulations and find a permanent home for Uber in South Carolina.”

In a blog post Thursday announcing the four-city launch in the Palmetto State, Uber said its smartphone app allows riders to see photos of their drivers and the cars they are driving, and watch them on the app while en route to the pickup location.

“There’s never been a safer, more seamless, and affordable way to move around your state,” the blog post said. “In South Carolina, our ridesharing service uberX offers Uber reliability with prices cheaper than a taxi.”

Listed sample fares included:

  • University of South Carolina to Williams-Brice Stadium in Columbia: $7;
  • King Street in Charleston to North Charleston: $15; and
  • GSP International Airport to downtown Greenville: $29

Taxicab companies typically contend that Uber can offer lower prices primarily because the company doesn’t comply with state and local regulations affecting taxis. A spokeswoman at Columbia’s business licensing department told The Nerve on Tuesday that Uber does not have a city business license.

“My only concern is that they should meet state regulations like everyone,” said Barbara Dotson, president of the Blue Ribbon Taxicab Corp. in Columbia, when contacted this week by The Nerve.

“We have no problem with competition, but if you want to be a cab company, you have to follow the rules,” Peyton Greene, general manager of the Cayce-based Checker Yellow Cab, which has about 110 taxis in its fleet, told The Nerve on Tuesday.

Greene said his drivers must have chauffeur licenses, and pass physicals and criminal background checks; and taxis must be inspected by the city. Unlike Uber, Checker Yellow taxis have to be covered by commercial insurance, he said.

In his affidavit, Parker said an Uber representative told the group of prospective drivers during the June 17 meeting in Columbia that their “personal liability insurance would be the primary insurance and Uber would be offering excess liability coverage in the amount of $2 million.”

“I witnessed the Uber representatives instruct the group to refrain from discussing their association with Uber with their personal insurance company,” Parker said.

On the blog post announcing Thursday’s launch, Uber said its “driver partners” must undergo a “rigorous screening process,” including a “stringent background check,” a driving history check and “ongoing quality controls.” It also noted that all rides are “backed by our industry-leading insurance policy.”

“They may be doing that, but they have not provided any evidence of that to us and haven’t provided that to the (state) Department of Insurance, either,” Hipp countered.

Legislative Fix?

Hipp told The Nerve that ORS and Uber representatives earlier this year discussed possible legislation that could help Uber, including “complete deregulation of the passenger-carrier industry,” and legislation modeled after a Colorado bill signed into law last month.

But Uber representatives expressed concerns then that the normally slow legislative process in Columbia “didn’t quite match up with their launch date” in South Carolina, Hipp said.

Under the Colorado law, Uber and other similar companies must obtain permits from that state’s Public Utilities Commission and carry $1 million in liability insurance, and vehicles must be inspected by mechanics, though drivers will not have to undergo the same criminal background checks required of taxi drivers, according to media reports.

In response to a question from The Nerve about the Colorado legislation, Uber spokesman Bennett in his written statement said: “We support any legislation that embraces ridesharing and puts consumer choice and economic opportunity first. Any attempt to restrict that consumer choice and limit opportunity and flexibility does nothing but hurt the thousands of residents and visitors across South Carolina who already rely on Uber for safe, convenient transportation.”

Asked if ORS supports the free market for companies such as Uber, Hipp replied, “Aside from an application process in front of the Public Service Commission, it’s a free market.”

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.