Rideshare Smartphone App Gets Legal OK

California officials have overturned a ban that prevented a smartphone app-based taxi-style service from legally operating.

The case was prompted by a smartphone app called 'Uber,' which allows customers to summon a luxury car and driver to their location at the press of a button. The cost of the ride is automatically charged to a customer's credit card.

The service was a welcome idea for customers who wanted to avoid trying to hail a cab. Unfortunately, Uber initially ran into problems with the California Public Utilities Commission (CPUC).

California Officials: Uber a Taxi Service

Why? Because the CPUC ruled that Uber was effectively running a taxi service without a license. The CPUC then slapped Uber's makers with a $20,000 fine and ordered the firm to halt business operations.

However, California officials and the company behind Uber have now reached an agreement. Under that agreement, the fine will be put on hold and Uber will be allowed to carry on with its activities.

Officials say Uber's drivers won't have to get a special license, though they will have to undergo criminal background checks and show proof of insurance. (Source: nytimes.com)

Rideshare Service Also Within Rules

California officials have also reached a deal with another company, Lyft, which it had also accused of breaching licensing rules. As with Uber, the commission has suspended a $20,000 fine.

Lyft's smartphone app allows users to enter a destination on a map. It then matches them with a private individual in their location who is heading in the same direction and has agreed to take passengers.

The passengers then pay a small contribution intended to help cover gas and vehicle maintenance costs. Lyft also took a cut of that fee.

The commission has now agreed that, in principle, services such as Lyft are legal, despite the fact that they don't fit the traditional taxi cab business model. That could mean other firms, including Uber, will start arranging ride-share programs.

Lyft noted that it already carries out criminal record and Department of Motor Vehicle checks on all drivers offering rides. (Source: lyft.me)

The CPUC says it now plans to launch a six-month study investigating both Uber and Lyft. The goal: to see if it needs to develop specific regulations for smartphone app-based driving services.