In recent months, ride-sharing apps such as Uber, Lyft and Sidecar have been attracting a lot of attention from the media and support from libertarians and conservatives.
These services provide apps that connect people who are willing to pay for a ride with vehicle owners who are willing to turn their cars into taxis. The idea is to provide a cheaper, more flexible, and more attractive alternative to traditional taxi cabs.
It is easy to see why these services have become so popular. The taxi service in many American cities is lousy or completely nonexistent. In the Samurai’s hometown of Denver, the only people who take cabs are out-of-town visitors and drunks coming home from the bar. The number of taxis in Denver is limited by a licensing arrangement, so there is little competition, poor service, and high fares.
Lots of people who need extra cash see these apps as a good way to make money by using something they already have, their car. Unfortunately, there are some serious potential problems with ride-sharing apps that their fans are ignoring. You should be aware of these potential problems before you sign up with such websites.
Here are a few things that Uber, Lyft and Sidecar will not tell you:
- There are too many drivers in several markets. In areas like New Jersey, where there’s a lot of demand for ride sharing, large numbers of drivers are trying it. That means it can be hard to find paying rides.
- You’ll pay all your expenses, except insurance. If you spend the day out looking for customers and don’t find any, you’ll still have to pay for gas for your car.
- You might not be insured. After a lawsuit in San Francisco, Uber has admitted that its insurance coverage was deficient and drivers were at risk from lawsuits. Yes, ride-sharing apps do offer insurance, but it only covers you while you’re hauling a passenger. If you get hit while driving to pick up a fare, you will be liable. You could get sued and your insurance rates could go up. To make matters worse, your insurance might not cover you because you’re engaged in a business activity.
- You only get to keep 80% of the fare with Uber. That’s right, Uber takes 20% of what you make, and you have to pay for the vehicle, gas, maintenance, and insurance.
- You probably won’t get any tips. Cab drivers at least get cash tips. Most Uber users don’t give cash tips because many of them don’t carry cash.
- You cannot charge mileage. If you pick up a person who wants a long trip, say from Denver to Boulder, you cannot charge mileage like a cab does. Instead, you have to charge a flat fee, even if you spend most of your day on a fare.
- It might be illegal. In some cities, such as Milwaukee and Seattle, Uber is technically illegal. Uber claims its app is illegal, but some city governments claim otherwise and they’re suing. In Colorado, The Denver Post reported the state legislature would have to change the laws to make ride sharing legal. The issue hasn’t been decided yet, so it’s not hard to imagine police arresting Uber or Sidecar drivers in some cities.
- The police might come after you. Huffington Post writer and producer David Fagin tried Uber driving and discovered that the cops in his hometown of Hoboken target Uber drivers with tickets. Uber has managed to get around the laws in many cities by suing city governments, but some municipalities are retaliating by having cops get out the ticket book.
- The competition is intense, and with the lousy economy, thousands of people are trying ride-sharing apps. You have to get to clients fast and watch out for poachers (other drivers that try to steal your fares). Many poachers simply drive up to people standing on the street and say “Uber.” They get the fare and pocket the cash.
- You could become a target for criminals. It wouldn’t be hard for a carjacker to use an app to call for a ride, then get into your vehicle and pull out his gun. Note: there’s a possibility that your insurance policy might not replace a stolen car in this situation because you’re involved in a “business activity.” Female drivers will also have to worry about sexual predators, as well as robbers. Ask yourself, ladies, do you really want to be alone in the car with a strange man?
- If that wasn’t bad enough, you could also be putting your life and others at risk. Fagin noted that when he did Uber driving, he had to use his phone and drive at the same time. That increases the risk of accidents and tickets. There’s also a possibility that insurance won’t cover such an accident because the driver was violating the law at the time.
The moral of the story is that you should think long and hard before joining the wonderful world of ride sharing. It isn’t all it’s cracked up to be, and there are a lot of dangers the companies promoting the apps won’t tell you about.