State agency: Uber ‘not legal in S.C.’

By Ashley Boncimino
ashleyb@scbiznews.com
Published July 10, 2014

Ride-sharing service Uber cannot legally operate in the state of South Carolina, according to state consumer protection agency the Office of Regulatory Staff.

The office has filed a petition with the Public Service Commission and has been notifying municipalities and airports about the issue, according to Dawn Hipp, transportation, waste and wastewater director of the agency’s Consumer Services division

The office will be actively enforcing state law using its four-person staff of inspectors, she said.

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Uber Technologies Inc. began meeting with the agency several months ago to discuss whether the state had a legal and regulatory framework to currently support the transportation network service.

“The answer was ‘no,’ we don’t have a current regulatory framework that would suit uberX,” said Hipp. “That is not legal in South Carolina.”

Two weeks before Uber began operating in four cities in South Carolina, the agency filed a petition with the Public Service Commission to determine whether Uber is a passenger carrier in South Carolina, according to an online PSC filing. (.pdf)

The petition alleges that Uber has failed to provide evidence of compliance with vehicle safety requirements and is advising potential drivers not to contact their individual auto insurance providers.

It also alleges “upon information and belief Uber does not intend to seek Commission approval or certification of itself or its partner drivers prior to its anticipated July 2014 start date.”

Uber does not have a business license in Greenville, according to the business licenses listing through the city’s Office of Management and Budget. The company also does not have a business license with the city of Charleston, said city spokeswoman Cameron Pollard.

“Generally what happens is we launch in these markets, and then we go about trying to educate local public officials about what we do and go from there,” said Guernier when asked about business licensing. “We aren’t a transportation company, we’re a technology platform for riders and drivers to find each other.”

The primary issues are safety and insurance, according to the agency’s consumer advisory memo from late June (.pdf). “Unless these drivers and ride-sharing companies that employ them have gone through the required regulatory process mandated by state law, the proper authority, insurance, criminal background check or vehicle safety inspection may not be in place,” the memo stated. “This situation can put both the passenger and driver at risk.”

Uber’s meetings with the Office of Regulatory Staff initially looked at offering Uber Black, its private-car hiring service, then shifted to the potential to offer uberX, the company’s lower cost service. After asking questions about insurance requirements, Hipp said the meetings dropped off and Uber began meeting and advertising for potential drivers in the state.

“We said we would be glad to look at what that framework would look like and submitting it to the general assembly,” said Hipp, who added that Colorado’s recent ride-sharing legislation might serve well as a model. “We are interested in Uber operating under an acceptable framework.”

Uber has ruffled feathers in other states and cities across the country, not only because of its unique business model, but also because of the insurance gap between an individual’s personal auto insurance and auto insurance intended for commercial use.

“A lot of people are under the impression that their personal policy is going to cover them, or that they just hope for the best. Either way, that’s not a good way to go into this,” said Bob Passmore, a senior director for Property Casualty Insurers Association of America.

The association represents 40% of personal auto insurance companies in the country, including some in South Carolina.

Personal or individual auto insurance policies do not cover accidents or damages incurred when people operate as vehicles for hire, said Passmore. This can, for example, leave people with no way to pay for damaged vehicles.

“These drivers need to have insurance that covers their specific activities as a transportation network company driver,” he said. “It’s not just ride sharing … this is carrying passengers for money, which is quite different.”

“In order for these businesses to grow and their innovations to flourish, we need to make sure their insurance policy is clarified.”

Reach Ashley Boncimino at 864-235-5677, ext. 103 or @ashleyboncimino.

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