How Do Rules and Regulations Affect the Sharing Economy?

Sharing Economy Companies not Subject to Rules, Regulations

Sharing Economy

AirBnB looks for loopholes, skirts regulations

A change may be in order for some “sharing economy” companies, such as Uber and AirBnB, two of the most popular business models of their types currently in existence. In December of 2014 in Amsterdam, the city and AirBnB crafted a deal laying out the details of what encompasses the company’s business in the city, as well as introducing a tourist tax. AirBnB will now be held accountable for collecting the tourist tax for its hosts, something the company had been able to skirt around before. However, discretion is still left up to the company to enforce this rule, and thus far, it hasn’t been 100 percent in compliance.

In addition to the tax, hosts in Amsterdam are only allowed to rent out their homes 60 days per year — this rule is in place to ensure that hosts are complying as part of the sharing economy, instead of running an illegal hostel, which would be ill equipped and lacking all safety regulations. In Los Angeles, AirBnB renters are getting mean mugged for being renters at all — aggravating the neighbors is becoming a constant problem, and zoning regulations in the city of angels may be enough to shut down the short term rental business. Many neighborhoods and zones in L.A. forbid renting at all: agriculture zones, as well as many single-family residential zones. In Portland, AirBnB lobbied for their overnight guests to be treated under the same rules as motel guests — these were passed and short-term stays are now wholly accepted in single-family homes in the Oregonian city. From temporary neighbors to noise complains and rising rental fees in surrounding buildings, it seems that AirBnB in residential neighborhoods is becoming more of a burden than previously percieved.

Uber vs Taxis – How do we regulate them?

Disability accommodation, Driver’s insurance, Redlining, Employment tax -

Uber drivers across the country are not subject to any of the four major issues highlighted above. Whereas taxi companies must operate some vehicles that can accommodate persons with disabilities, thus far Uber has placed no regulations on its drivers to be equipped for such a ride. Even more, Uber has been under attack in several lawsuits in which users allege their Uber drivers were unwilling to comply with the Americans with Disability Act (ADA) regulations: that transportation providers are required to accommodate wheelchair users if their equipment fits in the vehicle. The company files itself under the technology category, instead of transportation service, and thus does not feel the need to comply with ADA regulations. User’s burned by the company’s gray area surrounding their fine line between transportation company and technology firm are calling for legislation to provide rules and regulations that explicitly put into action the company’s current “non-discrimination policy”, which does not appear to be mandated.

More than just accommodation regulations, many rideshare companies are facing fierce insurance backlash as some drivers attempt to hide their side profession in an attempt to escape additional charges. Insurance and ride share companies are battling head to head, both claiming the other is the one in charge of insurance for the drivers in question. UberX, Lyft and Sidecar all claim that their driver’s insurance companies will cover any passengers; conversely, the insurance companies are pleading with drivers to buy a special transportation insurance, under the notion that regular car owner insurance is not enough to cover riding passengers.

Just as with the lack of ADA regulation for Uber vehicles that are mandatory for taxi companies, rideshare companies are also able to skirt around redlining issues. Redlining in this context is a driver’s refusal to pick up a passenger, or take them to, a certain area because of perceived risks. Uber’s opt-out model makes it difficult for riders in underserved, risky areas to catch a ride; taxi companies are required by law not to redline neighborhoods or districts, but once again, rideshare companies walk the fine line between transportation service and technology firm, negating the need to comply with all transportation regulations.

In the future, companies like Lyft and Uber may have to begin paying employee taxes, with tax authorities targeting unlikely employees, such as full-time yoga instructors.

How regulations are the future of sharing companies

From Uber’s lack of proper insurance mandates to AirBnB’s misuse of zoning regulations, sharing companies are now being subject to more and more federal regulations. With the sharing economy’s massive growth in the wake of its financial success, the spotlight is heating up on companies to take the large steps forward to complying with regulations that other similar companies hold. With rideshare companies toeing the line between transportation and technology, it seems like lawsuits, lawmakers and reviewing users may be the tipping point to throw companies over the edge into adhering to standards set out for traditional transportation services, such as taxi companies. Likewise, with cities across the globe throwing restrictions at AirBnB, it looks like the home sharing companies may also be subject to some new stipulations to place it on the same level as motels and inns.