Lyft postpones New York City launch after state AG Eric Schneiderman sues ride-sharing company

A taxi makes its way down Second Avenue

A taxi makes its way down Second Avenue in Manhattan on July 10, 2014. Taxis and limousines are regulated in New York City, and new app startups, like Uber and Lyft, are being challenged to abide by the regulations. (Credit: Getty Images / Timothy A. Clary)

ALBANY - The on-demand, ride-sharing app Lyft postponed its launch in New York City this past Friday, and a state judge says she has agreed to hear the company's response Monday to a suit from New York State.

The state attorney general's office and the Department of Financial Services sued only hours before San Francisco-based Lyft planned to enter the market. The joint lawsuit said the company actually operates as a traditional for-hire livery service using mobile technology, not a peer-to-peer transportation platform as claimed.

The company operates "in open defiance" of state and local licensing and insurance laws, according to the suit filed in Manhattan. Authorities allege Lyft began operating in Buffalo and Rochester without authorizations in April and already violates various laws, another issue they expect to further argue Monday.


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Justice Kathryn Freed told The Associated Press she agreed to consider Lyft's response Monday afternoon provided the company not launch in the meantime.

Attorney General Eric Schneiderman and Department of Financial Services Superintendent Ben Lawsky are seeking a court order to stop the company's New York service until the suit is resolved, plus a civil penalty and loss of profits.

"We pursued this action only after repeatedly offering to work with Lyft in order to ensure that its business practices complied with the law," they said in a statement. "Instead of collaborating with the state to help square innovation with statute and protect the public ... Lyft decided to move ahead and simply ignore state and local laws."

A day earlier, the New York City Taxi & Limousine Commission posted a notice that, in light of Lyft's announced plans to offer free rides in Brooklyn and Queens starting Friday evening, its so-called ride-share service is unauthorized in the city, that it has not complied with the commission's safety requirements and other licensing criteria "to verify the integrity and qualifications of the drivers or vehicles used."

Company spokeswoman Katie Dally said Lyft will not launch its peer-to-peer model in New York City unless it complies with New York City Taxi and Limousine regulations. Company officials will meet with the city commission starting Monday "to work on a new version of Lyft that is fully licensed by the TLC, and we will launch immediately upon the TLC's approval," she said.

Commission Chair Meera Joshi said they're gratified the company will be working with them on a service fully compliant with rules protecting public safety and consumer rights.

In April, the on-demand ride-sharing app, best known by the fuzzy pink mustaches on its cars, said it was launching its service in 24 new locations, nearly doubling the startup's U.S. markets.

Meanwhile, its rival Uber agreed with Schneiderman's office on Tuesday to abide by state laws against price gouging during emergencies, natural disasters or other unusual market disruptions. Uber later said it was adopting that policy in its other markets nationally. Its rates rise and fall with demand. On Monday, Uber has said it is temporarily cutting New York City prices in a bid to compete with taxis.

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