In early June, Uber announced its inaugural (one year) anniversary in a letter to Florida Governor Rick Scott. In the letter, the company stated it had given “8 million” rides in Florida and that “more than 20,000 residents” had driven for the company last year alone.
Besides the self-congratulatory tone of the letter, its real purpose was to urge the Governor and legislative leaders to address a myriad of regulatory hurdles that Uber faces throughout the state in a special legislative session. As some may remember, the Florida legislature’s regular session ended last month without Uber’s legislative goals being addressed.
To recap Uber’s legislative actions—the company sought a statewide preemption bill from all local regulations. The “Uber bill” would have:
- Created one statewide permit for the company vs. what is currently required of individual taxi drivers, i.e., having to register themselves and their vehicles locally. Uber’s suggested cost for that “one statewide permit” for all Uber drivers: a whopping $10,000.00;
- Preempted all local government or quasi-governmental agencies such as airports, convention centers or seaports from requiring permits or charging access fees for any Uber drivers; and
- Reduced the current insurance requirement for Uber drivers from 24/7 commercial liability insurance all other “for-hire” drivers must carry, to Uber’s “app on, app off” part-time coverage for their drivers.
Every year, corporations try to reduce red tape and regulatory financial burdens at all levels of government. That’s nothing new. What makes Uber’s actions different is that their philosophy is NOT to follow any laws first, then attempt to codify their unlawful actions by changing laws to match their illegal activities! Not only are they not paying for any required permits, access fees or carrying required insurance throughout Florida, they are attempting to get the legislature to tell them “it’s ok” after the fact.
Now that the legislature has rebuffed their efforts, it is obvious Uber knows they should have been following these laws all along. Why else would they attempt to change laws they don’t like?
Regulatory avoidance, cost shifting
Looking at Uber’s boastful anniversary numbers, one can see why Wall Street has valued the company at more than $50 billion dollars. With 8 million rides last year in Florida alone, its growth is quite impressive. But the numbers and Uber’s failed lobbying efforts also reveal their true recipe for success: regulatory avoidance and cost shifting to citizens and taxpayers. Simply put, would Uber be as successful if they simply followed the same laws as every other “vehicle-for-hire” company followed in Florida? Let’s run the numbers.
On average, every “for-hire” driver in the state of Florida is required to pay approximately $500 to local and state government for various permits fees, business licenses, background check verification, identification badge, vehicle inspection and so on. Uber illegally bypasses all of these fees for its drivers. In fact, they’ve informed their drivers “if you get caught, we’ll pay your fine.” Moreover, Uber attempted to codify its illegal activities into law but failed to convince the legislature for a one-time annual permit of $10,000. With 20,000 Uber drivers on the road, the company has bilked state & local governments out of $10 million.
Airports, convention centers and seaports are often some of the most lucrative places to provide “taxi” service. With Uber drivers it’s no different, except, of course, that they don’t pay the pick-up fees required at most ports.
Airports charge concession fees so they can grow their infrastructure and most charge approximately $3-$5 for each ride originating at the point of pickup. Uber stated they provided 8 million rides last year. Let’s just assume, conservatively, that 5% of those trips originated from a location that required a trip charge. That’s 400,000 trips at $3-$5, totaling $1.2-$2 million that Uber has defrauded Florida airports last year, alone. If you think “defraud” is too strong of a word, consider Orlando International Airport is suing Uber for a minimum of $150,000 and Uber’s own internal email instructed their drivers how to avoid detection and payment at several South Florida airports. It’s no wonder Uber wanted to pass a state law forbidding airports, convention centers and seaports from charging their drivers a few bucks a trip. A million here, two million there and that’s real money.
Commercial vs. personal insurance
Lastly, there’s insurance. The primary thrust of Uber’s legislative action was to lower the insurance requirements on their drivers from a state mandated “24/7 commercial liability” policy to only cover the driver and vehicle when the smartphone app was on. People get in accidents all the time. And typically, the more you drive the more likely you are to get into an accident. That’s why the state of Florida requires “commercial insurance” for “commercial activity.”
But guess what? Uber doesn’t adhere to that higher standard. Why? Because it’s cheaper for Uber to have their drivers to lie to their personal insurance carriers about the fact they are providing “for-hire” transportation and far more lucrative to shift any accident costs to all other ratepayers. On average, it costs about $3,000-$4,000 more for commercial insurance. Based on 20,000 drivers, Uber is under-insured to the tune of $60 million to $80 million in Florida alone. So, as Uber drivers get into accidents—and they do—who picks up the tab? The answer: the rest of us, or at least those of us who play by the rules and pay for our required insurance.
Uber hired 27 lobbyists in Tallahassee this year to address their regulatory problems. Why would they spend all that money and time if they didn’t think the current laws on the books applied to them? The fact is that the laws do apply to each and every Uber driver in Florida. All other vehicle-for-hire drivers, whether they be taxi drivers or luxury drivers, pay for permits, remit payments to airports and carry 24/7 commercial liability insurance. Yes, it’s expensive but it’s also the law.
Amazingly, Uber has ignored all these requirements for a year while lobbying for a statewide remedy. Now they have the audacity to brag about their recklessness on their one-year anniversary. Perhaps it’s time for the company to skip its self-aggrandizing missives and simply play by the rules of the road, pay what it owes the State of Florida and stop shifting costs to the rest of us. In other words, happy birthday Uber, now grow up!