Ridesharing Startups and the Need for Legitimacy on Safety

+ Kari Kohn

Ridesharing startup, Uber, has been in the press recently for allegedly contracting with a driver who has a criminal record despite the company's claim that all drivers undergo background checks. However, there apears to be no standard definition of a background check. PandoDaily's Carmel Deamicis writes:

When the California Public Utilities Commission legalized ridesharing in September 2013, it required the so-called Transportation Networking Companies to perform “national criminal background check[s] including the national sex offender database.” Unfortunately, such an official sounding decree is a lot of bark with no bite.

National background checks vary wildly in quality, scope, and validity. “A background check is whatever you want to call it. It’s not necessarily a particular set of instructions,” Willingham says. “You can do anything from $15 background checks, to billing out a client for $100,000 background checks which involve digging into every piece of dirt in a person’s past.”

Anyone could buy a $15 background check off the Internet that simply searches available online records. But not all court records in all states are online for the public. In fact, in San Francisco public records can only be retrieved in person at the courthouse. As a result, cheap, unofficial background checks can easily miss crucial information and prior convictions.

Ridesharing startups don’t have the oversight of traditional taxi companies in California. In most major cities, taxi companies are required to do Live Scan, fingerprint-based background checks of their drivers through the Department of Justice and FBI systems. According to William Rouse, the former President of the Taxicab, Limousine & Paratransit Association, the background check results go straight to the transportation regulatory agencies for vetting, not just to the taxi companies themselves.

In its short history, Uber has been unwilling to take a strong stand on addressing issues regarding the safety of its customers, and this is also evident in their terms of service citing the lack of liability due to classifying itself as a Internet Service Provider. (Other ridesharing startups have similar terms of service language.)

Lastly, and most importantly, users don’t know whether they’re protected hopping in cars with ridesharing strangers. The companies have sent mixed signals about how thoroughly they vet drivers and how much they value passenger safety. When it suits them, they claim to care about safety and background checks, and when it doesn’t suit them, they call themselves a platform and deny responsibility.

When it comes to legitimacy in providing safety, the relationship between firms and customers is not all that different from the relationship between cities and residents. Perhaps firms could learn from  a recent conversation between William Bratton, newly appointed head of the NYPD, and Paul Romer, economist at NYU Stern. The two sat down in the fall to have a Conversation on Urbanization about policing at the city level. Here is an excerpt from a dialogue published by City Journal after the event.

Across the world, public safety is the most important task facing city governments. In many poor countries, crime holds back the kind of urbanization essential for economic development. Closer to home, Detroit shows us that if they can, people will flee a city that fails to provide basic public safety…

Yes. In a democratic society, the Number One obligation of the government is public safety. And the criminal justice system is the entity charged with that responsibility. The police, through their behavior, are entrusted to enforce the law. A key challenge is to do it constitutionally. You can’t break the law while enforcing it.

Just as cities look to attract and retain residents, it's possible that demonstrating legitimacy around safety is going to be a key for ridesharing startups to ultimately be successful. In NYC, legitimacy in the public safety system arises from the head of the NYPD being appointed by a mayor who is democratically elected as well as a supporting criminal justice system. In the private sector creating legitimacy could mean taking on some degree of liability and insuring against it. Airbnb offers an example:

This is the same issue that originally faced Airbnb: Users had a sense of security through the site, one that the company wasn’t originally willing to support.

Brian Chesky talked to Sarah Lacy about that at PandoMonthly a year ago. The first major incident to blow up in Airbnb’s face occurred in 2011. A woman rented out her home on Airbnb and had it destroyed by meth users. The company tried to cover up the situation and pretend like it had dealt with everything, in part to avoid legal culpability.

That failed and the woman continued to go public with her story about the systematic dismantling of her privacy and her home. Eventually Chesky decided that Airbnb had to “be Airbnb” and “do what [we] think is the right thing to do,” even if that meant accepting huge amounts of fiscal liability.

He publicly apologized, admitted Airbnb’s responsibility in the incident, signed a check to the woman, and introduced a $50,000 insurance policy for anyone who rents their home through the service. That policy now covers $1 million in damages.

Tile image courtesy of Washington State Dept of Transportation.

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