Uber and Lyft pushing out Morris drivers

After a late night at the bar or a trip into New York City, many Morris County residents typically called a local limousine or taxi service but more frequently, people are now taking out their smartphones and using a ride sharing application to get home.

Uber and Lyft, the two most popular ride sharing companies, use smartphone applications to request trips and connect people with local drivers, who essentially act as independent contractors. The customers can track their ride as it arrives and receive fare estimates on the app. People pay via credit card through the app so cash and a tip are never exchanged.

The services are available in hundreds of cities worldwide and have a devoted following. But many, particularly professional limo and taxi drivers, say the operation is illegal. Legislators in New Jersey are debating what type of regulation is needed with much of the debate centered on insurance.

While both companies have professional operations that make use of regulated drivers using black cars and SUVs, the large majority of drivers are unregulated, using only personal insurance and their own vehicles, keeping fares cheaper for customers.

A group of local professional drivers say the ride sharing practice in New Jersey is not only illegal, but downright dangerous due to the use of non-professional drivers without proper liability coverage.

“They’re bringing us to the brink of shutting down,” said Moe Sattar, who is the founder of northern New Jersey-based Safe Rides Unlimited, a nonprofit service designed to offer cheaper rates to discourage drunk driving. “Think of all the local drivers unable to support their families. And imagine how many unlicensed drivers will be on the road on New Year’s Eve.”

Three limousine drivers, Gary Davis, Louis Cinque, and Eugene Greenlief, who work with Safe Rides, say they have lost between 40 to 60 percent of their business since ride sharing apps like Uber and Lyft entered the area about two years ago.

Sattar said he used to spend $5,000 per month on marketing, and to compete with ride sharing companies that figure is up to $15,000 just to do less business than before. He added lost business from the industry to ride sharing apps means lost taxes for municipalities.

Sattar said drivers used to be able to make a living just driving around Morris County but now they have to extend their business to New York City and the Jersey Shore.

Davis has worked in the New Jersey limo industry for 30 years and says these are tough times for drivers.

“It’s hard to make money like I used to. I used to make big money and now it’s gotten to half of that in the past year or two. Each year you do less and less,” Davis said. “Used to be I could easily make $1,000 in a weekend. Now maybe I could pull in $400 or $500 on a good weekend.”

Davis said he used to work from 8 a.m. to 2 a.m. Friday through Saturday, but now Friday and Sunday fares are almost nonexistent.

Cinque, a driver for 24 years, said the change in the industry is noticeable, and jobs have dwindled to “next to nothing,” something he believes would quickly change if the ride sharing apps company followed the same guidelines as other drivers.

“It’s the wild west right now. If everyone just played by the same rules, that’s all we want,” Cinque said. “We want them regulated. They wouldn’t be able to survive if they played by our rules.”

Greenlief said ride sharing companies can charge less because they don’t have the paperwork and licenses. They only have to pay personal car insurance, about $150 a month.

Limos and taxis pay licenses, inspections, and town fees. It costs $400 per month for town car liability insurance and $600 to $700 per month for a limo. There are also additional annual registration with the town of $65, background checks of about $100, and $100 drug tests.

“As a consumer, how do you know who you’re dealing with?” Davis said. “The consumer only cares about a cheap rate, but that’s how you get hurt.”

A limo license in New Jersey requires a minimum $1.5 million liability coverage, and at least $5 million for drivers who travel interstate and in larger vehicles. But most ride share drivers just have personal insurance, covering as little as $15,000 worth of damage and personal injury in the event of an accident.

“Our cars are licensed through the state, tested but these guys are right off the street, their cars aren’t inspected or tested, only for emissions,” Cinque said. “We provide a good, certified operation. But these guys, they could be on the bar stool next to you. I don’t think people understand.”

Sattar said ride sharing companies get around the law by not having cash transactions, rather a “donation” from a credit card.

“The strategy is to go into a new area, take a loss for as long as it takes to get the legitimate businesses out. Then they’re the only rides in town,” Sattar said. “What they want is name recognition so if someone tries to stop it people will say ‘don’t take away my Uber.”

Sattar said in many cases, with hiked rates for peak hours and holidays, these ride sharing services aren’t even cheaper like people assume.

“Gentlemen like Ali are getting killed because he’s following the law,” Sattar said. “Lou has 15 drivers. That’s 15 families he’s responsible for that might be our on the street with no money soon because their source of income is gone.”

Sattar said there is currently a bill in the New Jersey Senate, supported by Sen. Joe Pennacchio, R-Morris, and written by Sen. Brian Stack, D-Jersey City, to regulate the actions of ride share drivers.

“There’s a bill on the Senate floor that Uber lobbyists make sure doesn’t get passed, even though there are Senators accepting donations from limo companies,” Sattar said. “While the bill sits we’re in a leaking boat that can’t stop.”

Sattar said he hadn’t heard an update on the bill in a month.

Pennacchio said he wants the conversation started about the safety and health of these ride share companies.

“Above all else we do not want to harm anybody,” Pennacchio said. “The premise is that sharing a ride is sort of OK but unregulated it is not. Some things need to change regarding safety, health, and reliability.”

Currently, Pennacchio said the bill is with the transportation committee, and he’s heard Uber lobbyists are interested in making amendments.

“That is fine but we have to get the issue out there. This discussion should start,” Pennacchio said. “There needs to be mandatory rules and regulations for these ride sharing companies, making sure they are properly insured.”

Pennacchio said he believes many who use the services don’t know the driver’s don’t have liability insurance, and the companies need to be held responsible in the event of something goes wrong.

“There is stuff I think we need to address with licensing and proper insurance,” Pennacchio said. “Uber is doing well and sees itself as a third party, but if you’re getting money, you’re part of the process and need to be held accountable. They just can’t abdicate themselves from responsibility as a third party.”

Sattar said he is considering organizing a strike until ride sharing companies are dealt with.

“If the state doesn’t do anything about it, there will be no limo industry,” Sattar said. “I give it two years before its gone if this keeps up, and the cabs even sooner.”

The tides may be turning though, as more cities have recently banned Uber, citing public safety concerns.

Just this week Portland has filed a lawsuit against Uber following a rollout in its territory, and overseas countries including Spain and Thailand have banned the app due to a lack of proper licensing. New Delhi banned Uber last week after a passenger accused a driver of rape.

Thursday state Assembly Transportation committee approved a bill calling for expanded insurance coverage and special authorization from the Motor Vehicle Commission for drivers, similar to other commercial drivers. It also calls for driver background checks and vehicle inspections.

Lyft spokesperson Chelsea Wilson said the current bill did not work with Lyft’s model, but the company looked forward to working with lawmakers on the matter.

Uber spokesperson Natalia Montalvo said the bill would threaten the company’s current ride sharing model. She specifically cited the part of legislation that called for $250,000 in liability insurance for drivers starting at the time they open the app to look for riders until they close the app, saying it overstated the risk involved.

Montalvo said Uber did not object to the $1.5 million coverage during the ride.

The bill will next go before the full Assembly, but a voting date is not yet scheduled.

While the bill isn’t the same as the one in the Senate, Pennacchio said it’s a good step forward because it keeps the conversation going.

“It’s very timely,” Pennacchio said. “We have some real concerns that need to be addressed, making sure this is safe, regulated, and we know who is driving. This is a nationwide issue because these ridesharing companies are worth so much money. ”

Greenlief believes it may unfortunately take fatal accidents before anything changes, and in the meantime, he loses more money every week.

“They make it impossible. They come in legitimately, using our drivers and licenses, then once they’re in they bring in the unlicensed ones and jump off our backs,” Greenlief said. “We’ll all be working for Uber in three years.”

The Associated Press Contributed to this story. Staff Writer Michael Izzo: 973-428-6636; mizzo@dailyrecord.com