Watchdog: Follow the Money

Fleet owners are behind protests over ride-sharing services Uber, Lyft

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Contrary to popular perception, cab drivers are not leading the campaign against Uber, Lyft and Sidecar, the latest Internet-inspired ride-sharing alternatives to conventional taxicabs.

Teamsters Union-led cabbies generated some headlines last week when they clogged the streets in the nation's capital to protest the new web-based services.

Digital ride-sharing enables passengers to "hail" drivers by using apps on digital devices like cell phones, tablets or computers. Fares normally are well below metered taxi rates, and most drivers are not part of their city's taxi system.

The most aggressive protests against ride-sharing have been organized and led by an obscure trade group called the Taxicab, Limousine and Paratransit Association, based in Rockville, Md., a Washington suburb.

Despite its name, TLPA doesn’t represent a single cabbie or limo driver. Instead, it represents 1,100 owners of cab, limo and van fleets.

These business owners realized they could lose a great deal if ride-sharing grows in popularity, so for the last two years, the association has spearheaded an effort to turn back the new services.

Leading the campaign is TLPA CEO Alfred LaGasse. He has never driven a cab in his life, according to a TLPA spokesman. Nor is he a blue-collar worker. He's been with TLPA for 39 years.

TLPA pays LaGasse annual compensation of $324,376, according to the group's 2012 IRS Form 990 tax return.

The median take-home pay for a cabbie nationally is about $32,000 a year, according to salary.com.

TLPA claims it is mainly concerned about consumers, but Robert Werth, TLPA’s current president, has refused to respond to any Better Business Bureau inquiries, and his company remains unaccredited and unrated by the consumer group.

For ride-sharing members, no money changes hands in the car, as the fare is paid electronically. The drivers pick up customers at a convenient location.

Meanwhile, customers can see where their car is, where it is traveling from and when it will pick them up.

Anyone can become a ride-sharing "partner" or driver by applying to the company. The company does not own cars or hire drivers in the traditional sense — it only links riders and drivers.

The taxi and limo drivers are alarmed as ride-sharing becomes increasingly popular. And they are vigorously trying to stop it, intervening in multiple states and cities to outlaw ride-sharing.

Some observers, including the Manhattan Institute's Jared Meyer, describe the taxi industry as an old "entrenched interest" trying to thwart innovation.

TLPA reported assets of $1.4 million in 2012, up 9 percent from the previous year. Its income mainly comes from its members. Each year, it invests $1.2 million in financial derivatives and closely held equity interests, according to its IRS filing.

LaGasse’s organization has launched a campaign called “Who’s Driving You,” which slams ride-sharing as “unregulated taxi services.”

The campaign organizers claim ride-sharing operations use “amateur drivers” who are hired without background checks and carry inadequate insurance.

Now TLPA appears to be at least doubling its national budget with its campaign against ride-sharing companies.

Uber, one of the largest ride-sharing companies, has charged that TLPA has a "$1 million war chest" to fight the firm, but TLPA has refused to make its budget public.

However, TLPA’s California chapter has said it has raised $500,000 and hopes to raise another $250,000 to counter ride-sharing, according to the San Francisco Business Times.

TLPA declined to disclose to the Washington Examiner how much it plans to spend on the campaign.

The TLPA's anti-ride-sharing campaign may be paying off. Earlier this year, for example, the Virginia Department of Motor Vehicles issued cease-and-desist orders to Uber and Lyft.

John Boit, who works for Melwood Global, a public relations firm retained by TLPA, said 16 states have issued some form of insurance warning about the dangers of ride-sharing.

Brittany Krop, who also works for Melwood Global, regularly sends reporters emails from TLPA containing information that is critical of ride-sharing.

Krop has alleged passengers have been assaulted, kidnapped and even faced death in ride-sharing cars.

The growth of ride-sharing isn't the only problem facing the TLPA. In the District of Columbia, the D.C. Taxicab Commission receives 25-28 official complaints from cab customers each week, according to Neville Waters, a commission spokesman.

That’s nearly 1,500 complaints a year against the 5,700 active taxicabs registered with the commission.

Taylor Bennett, an Uber spokesman, argued that the ride-sharing system is safe and reliable.

“We provide an affordable, safe and reliable form of transportation where the taxi industry has not changed. They haven’t met that demand. They haven’t innovated. We’ve done that.”

Bennett said Uber provides $1 million per incident coverage in commercial insurance over and beyond the coverage paid for by drivers. A Lyft spokesman said that company has a similar approach.

Bennett also said Uber conducts background checks that “set a new industry standard,” going back seven years. D.C. taxicab background checks only go back three years.

“Criminal records, courthouse records, DUI, sexual offenses, any gun-related offense. All of these criteria go into a background check for the past seven years,” Bennett said.

“We do regular driving-record checks to ensure that their driving record is clean and continues to be clean."

But TLPA may also have a credibility gap of its own as it claims its fleets are safer and more consumer oriented than ride-sharing programs.

For example, Werth, TLPA’s current president, owns Diamond Transportation of Springfield, Va., which has not been accredited by the Better Business Bureau since the company was founded in 1984.

As recently as last September, BBB contacted Diamond to seek information about the company, as the BBB does every three years.

But, as in previous years, the firm never responded, according to Edward Johnson, president and CEO of the Greater Mid-Atlantic Better Business Bureau, in an interview.

Werth's company remains unaccredited and unranked as a result.

For years, Werth also provided drivers for the long-troubled and widely panned MetroAccess service, a van service for people with disabilities in the D.C. region.

The service has long been criticized as poorly managed, inconvenient and rude to its passengers.

In 2013, the Washington transportation authority awarded Diamond $9.7 million to provide drivers to MetroAccess.

But in reality, all of the companies informally hire each other's drivers even though it appeared competitor MV Transportation was the main provider of service to the troubled system.

Erick Frye, a personal injury lawyer in the Washington area, told the Examiner he encountered "many" Diamond Transportation drivers who worked for MetroAccess.

“Over the years," he told the Examiner, "as far as I can tell, they’re all the same people, running their things with 7 or 8 or 10 different corporate entities."

As an example, Frye recalled a 2009 MetroAccess accident involving Tamika Marshall, a double amputee, and her 24-hour aide. Diamond provided the driver. Frye won the case, and the company paid about $11,000.

TLPA hopes it can slow or halt ride-sharing altogether. But even the D.C. taxi commission chairman conceded ride-sharing services are here to stay.

“There is a consumer demand for the kind of service that they call ride-sharing. There’s a demand for that service,” commission chairman Ron M. Linton told the Examiner in an interview.

“It’s like Prohibition. We adopted prohibition, and everybody drank anyway. There are people who want to use the kind of service that Uber, Lyft and Sidecar give. And if we were to rule them illegal and try to prevent them, they’d still be doing it.”

Spokesmen for LaGasse and Werth said they were unavailable to comment for this story.

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