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Post date: June 18 2015

A.G. Schneiderman Announces Joint Settlement With LYFT

Settlement Ensures Lyft’s Compliance With State And Municipal Laws, Requires Lyft Drivers To Have NY-Authorized Auto Insurance

Schneiderman: Agreement Echoes My Commitment to Ensuring Fair Competition And Consumer Safety Statewide

NEW YORK – Attorney General Eric T. Schneiderman today announced that his office and the New York State Department of Financial Services have agreed to the terms of a consent order and judgment with Lyft, a company that provides for-hire livery services where the company, among other things, dispatches cars through a phone app. The consent order, which resolves an action filed against Lyft in July 2014, requires Lyft to pay $300,000 in penalties for alleged violations of New York state and municipal laws—one of the largest penalties enacted against a ‘sharing economy’ company to dateLyft has agreed that it will comply with the relevant provisions of the New York Insurance Law. 

“I have always been committed to fostering an innovative and competitive environment in which both new and existing companies can flourish in our great state,” Attorney General Schneiderman said. “However, it’s critical that the laws put in place to protect consumers and ensure fair competition are not violated in the process. Today’s agreement enables Lyft to grow and prosper within the bounds of state and local regulations, while the penalties imposed send the message that companies that attempt to skirt the law will be held accountable. I want to thank former Superintendent Lawsky and the Department of Financial Services for their continued partnership in making New York’s marketplace one where all entrepreneurs can thrive under the same set of rules.”

As part of the consent order, Lyft drivers will be required to have auto insurance issued by New York-authorized insurers. The insurance must cover drivers while they have the Lyft app turned on to receive requests to pick up passengers through the end of any rides they provide. Additionally, the consent order prohibits Lyft from offering, selling or providing insurance policies that do not comply with the New York Insurance Law. 

The consent order also requires Lyft to comply with all other state as well as municipal laws applicable to vehicles-for-hire. Lyft must also inform the Superintendent, the Attorney General, and the counsel of any municipality or other jurisdiction in the state where it intends to launch its service at least three weeks before such a launch. 

Last July, Attorney General Schneiderman and then-Superintendent Benjamin M. Lawsky sued Lyft in New York State Supreme Court for running a for-hire livery service in alleged violation of New York state and municipal law. The complaint alleged that Lyft violated the law by failing to require its drivers to hold commercial licenses, carry adequate insurance, or comply with local for-hire licensing rules. 

Lyft began operating in Buffalo and Rochester in April 2014 without obtaining the necessary approvals or notifying those cities of their operation. The Attorney General and Superintendent learned that Lyft was about to launch its service in Brooklyn and Queens on July 11, 2014 a few days before the launch. When Lyft refused to delay its launch, the Attorney General and Superintendent filed a lawsuit against the company seeking to enjoin it from launching in New York City and from continuing to operate in Buffalo and Rochester in violation of the law. 

After several days of hearings before Judge Kathryn Freed of New York State Supreme Court, the parties agreed to stay the lawsuit in order to enable the parties to attempt to resolve it. Lyft agreed to suspend its operations in Buffalo and Rochester by August 1, 2014, and not to launch in New York City until it had the approval of the New York City Taxi and Limousine Commission and operated in accordance with the New York Insurance Law. 

This case is being handled for the Attorney General by Assistant Attorney General Melvin L. Goldberg, Special Counsel Carolyn Fast, and Bureau Chief Jane M. Azia, all of the Consumer Frauds and Protection Bureau, Senior Advisor and Special Counsel Simon Brandler of the Executive Staff, and Executive Deputy Attorney General for Economic Justice Karla G. Sanchez. The case is being handled for the Department of Financial Services by Joy Feigenbaum, Executive Deputy Superintendent, Special Counsel Max Dubin, Supervising Counsel Brian Montgomery and Deputy Director Nancy Ruskin, all of the Financial Frauds and Consumer Protection Division.