Virginia DMV Orders Uber and Lyft to Cease and Desist

Yesterday the Virginia Department of Motor Vehicles issued cease and desist letters to Uber and Lyft, claiming that the companies, which connect passengers to drivers via smartphone apps, are in violation of Virginia law. In the letters, DMV Commissioner Richard Holcomb wrote that Lyft and Uber’s ride-sharing operations “are not ridesharing arrangments as defined in Virginia law” because drivers receive compensation for their services.

The Arlington County Police Department will be assisting in enforcing existing legislation, although a spokesman said “it will not be a primary focus of our operations.”

In the wake of the cease-and-desist letters, Uber’s East Coast Regional General Manager Rachel Holt said,“We’re still operating as usual throughout D.C., Maryland and Virginia,” and Lyft said in a statement, “We’ve reviewed state transportation codes and believe we are following the applicable rules. We’ll continue normal operations as we work to make policy progress.”

The Virginia DMV has previously fined Uber and Lyft ($26,000 and $9,000 respectively), however the recent letters say that the DMV will issue civil penalties of up to $1,000 per violation to individual drivers caught breaking Virginia regulations.

The DMV letters are only the latest regulatory and legal hurdle that Uber and Lyft face. I have previously written on this blog about some of those challenges, which are taking place across the country.

Rather than hinder the growth of innovative livery companies that are taking advantage of new technology, lawmakers in Virginia and elsewhere across the country should consider repealing current taxi regulations that restrict innovation, strengthen established market players, and stifle competition.

Uber and Lyft are popular for a reason: they provide a reliable and desired service at prices customers have indicated that they are willing to pay. In a fair and level playing field with fewer regulations, their competitors would have to rely on improving their own services rather than on market-distorting legislation.

I discussed these issues with Caleb Brown on today’s Cato Daily Podcast that you can listen to here: