Ridesharing Services Uber and Lyft Charged with Racketeering by Cab Companies

In Connecticut, two booming ridesharing services, Uber and Lyft, face charges of racketeering in a lawsuit filed by cab and livery companies, which allege that the two ridesharing services “prey parasitically” on established businesses. The Federal Racketeer Influenced and Corrupt Organizations Act (RICO) gives the government discretion to investigate and prosecute the operation of an illegal business or enterprise, including a fraudulent scam, for an individual or entity’s personal profit.

The ridesharing services allegedly broke Connecticut law because they do not have proper licenses, “cut corners illegally” and undermine “critical safety provisions of Connecticut taxi and livery laws,” which led to the racketeering charges filed by taxi companies in a federal court in New Haven.

Both Uber and Lyft are based in San Francisco, but ridesharing technology is becoming more popular across the country, and the two companies expanded their businesses into Connecticut in April.

Ridesharing services operate through mobile phone apps. Drivers affiliated with either company work as an independent contractors. Each driver drives his or her own personal vehicles instead of a taxi, and must maintain insurance on the vehicle to cover damage in the event of an accident. Although the rideshare services who created the app allow drivers to find potential fare, and take some cost off the top of a customer’s fare, they do not provide drivers with vehicles.  Similarly, they do not provide insurance to cover an accident or injury. The Taxicabs & Livery Council of Connecticut Inc., along with a dozen other taxi and livery companies, claim that the businesses are breaking federal racketeering laws, and cannot operate legally in Connecticut.

“This baseless lawsuit is just another example of taxi company owners trying to shield themselves from perceived competition and limit consumer choice and driver opportunity,” Nairi Hourdajian, a spokeswoman for Uber, said in a statement. “Uber will vigorously defend the rights of drivers and riders to connect to safe, affordable and reliable transportation alternatives.”

Chelsea Wilson, a Lyft spokeswoman, said the lawsuit “is without merit and we look forward to resolving it quickly and effectively.”

The racketeering lawsuit filing claims that Uber and Lyft operate illegally by “misappropriating the infrastructure of existing taxi and livery services.” The ridesharing firms also manage to duck existing regulations such as background checks for drivers and liability insurance, which can put customers at risk of injury.

“Our issue with these services is they are a taxi company,” said John Boit, a spokesman for the national Taxicab, Limousine & Paratransit Association, which isn’t a part of the Connecticut lawsuit. “They’re transporting human beings which is a dangerous prospect at any time, whether you’re in a family car, or whether you’re a taxi driver.”

Other lawsuits against Uber and Lyft have been filed for a variety of reasons in other states, not just for racketeering. The issue of companies’ insurance came up in January of this year when the family of a 6-year-old girl, who was killed by an Uber driver while she crossed the road with her family, alleges that the mobile app encourages distracted driving.

The Strom Law Firm Can Help with Racketeering and Other RICO Charges

RICO charges involve the operation of an illegal business or enterprise, including fraudulent scams, for an individual or entity’s personal profit.

The Federal Racketeer Influenced and Corrupt Organizations Act (RICO) and similar state racketeering laws give the government a tremendous amount of power to go after those accused of racketeering.

Being arrested or investigated for federal criminal charges can be very stressful. However, just because you are under a great deal of pressure does not mean that you are automatically guilty, or that you have no rights in court. For experienced RICO and federal criminal charges defense attorneys who will fight for your rights and work to have your charges reduced or even dismissed, contact the attorneys at the Strom Law Firm, today. We offer free, confidential consultations so that you can discuss the facts of your case with impunity, in a safe environment. Do not hesitate to contact us. 803.252.4800.