Old and obsolete laws are being misused to squash competition, stifle innovation, and increase costs to consumers.
New and disruptive business models from companies like Uber, AirBNB, and TrueCar are generating opposition from entrenched traditional businesses. The worst part is that entrenched businesses are twisting laws designed to protect consumers to prevent them from enjoying the benefits of these new services.
Uber.com enables consumers to hail a personal car service through their mobile-device and automatically pay for the trip. But Uber’s success has taxi commissions across the country citing “hack” laws to stop Uber and preserve taxi monopolies.
With Uber’s innovative service, when you leave the house you just “hail” an Uber car on your phone and within minutes the driver is at your door. This relieves the frustrating experience of trying to hail a cab in areas where taxis are scarce.
And when it comes time to pay, instead of fishing for your wallet and hoping you have enough small bills, Uber automatically charges your associated credit card and sends you a receipt showing the exact route taken and total costs.
But this convenience is a threat to existing taxi monopolies that don’t want to compete with Uber on features and convenience. And these taxi monopolies are misusing consumer protection laws to stifle new businesses like Uber’s.
In Tampa last month, RNC convention-goers really enjoyed the convenience of Uber’s system. But once the convention ended, Uber had to roll-up the program when the city mandated a minimum charge of $50 per trip. The same thing happened in Las Vegas, which classified Uber as a “livery business” and imposed a $40 minimum for rides.
Boston initially targeted Uber by declaring that using GPS devices to track trips was illegal (Boston later pulled back from this decision after a public out-cry).
Entrenched interests are using laws designed to protect consumers to prevent them from enjoying the benefits of these new business models.
And Washington, DC’s taxi commissioner twice tried to stop Uber’s services by first declaring the service illegal and later trying to change the rules so that Uber cars must charge five times as much as taxis do.
Most recently, the New York City Taxi Commission issued a public notice that taxi and livery drivers can’t use electronic hailing or payment applications.
AirBNB.com allows others to rent your home for short periods of time. This creates a new form of “bed and breakfast” — saving money for the traveler and generating some extra cash for the home owner.
But this online service faces challenges from regulators in Iowa, who want AirBNB to be regulated as a travel service. New York lawmakers moved to impose hotel regulations on individual homeowners using Airbnb. And in Seattle, legacy laws prevent home owners from renting thru services like AirBNB.
On the other hand, Chicago realized the value of these short term rentals and passed laws to explicitly authorize these types of rentals. In San Francisco, forward-thinking Mayor Ed Lee is trying to change the city’s legacy laws to legalize rentals for less than 30 days.
TrueCar.com helps car shoppers find the best prices for their next new or used car while simplifying the negotiating process.
But state laws (new and old) continue to limit the options available to consumers using this innovative service. Fortunately, TrueCar is making adjustments in some states so it can continue serving consumers and drive leads to participating dealers. However, if these old laws were repealed or updated, TrueCar might be able to do even more for new car buyers and the dealers who want to serve them.
To eliminate these barriers to innovation, some state regulators just need to issue a simple clarification. In other states, older laws may need to be updated or repealed to reflect the realities of the digital world.