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Ride-sharing startups come under fire in California, aim to help regulators understand business model

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It turns out Uber isn't the only transportation startup facing unwanted scrutiny from regulators. Three California-based ride sharing businesses – SideCar, Lyft, and Tickengo – have responded to cease-and-desist orders from the state's Public Utilities Commission that accused the companies of operating without necessary permits. The commission's primary concerns revolve around a lack of verification: by maintaining that they accept voluntary donations and not traditional fares, the companies in question have attempted to skirt around existing taxi regulations. State officials view this as a dangerous to passengers, suggesting that because the services don't adhere to established screening protocols, riders could risk being denied insurance coverage and be saddled with exorbitant medical bills.

Yet SideCar and Lyft have persisted with the argument. "It's not a transportation company, it's a communications platform," said SideCar CEO Sunil Paul. "The tools we have to connect are better and brighter than ever before," he says. Each defends their business as legitimate and safe, with Lyft pointing to a "first-of-its-kind" $1 million excess liability policy as proof of its commitment to drivers and passengers alike. Further, they believe CPUC has yet to gain a proper understanding of where their companies can fit in alongside traditional transportation options. "Today more than ever, we are convinced that transportation status quo is unacceptable," reads Lyft's response, arguing that new technologies have spawned more affordable and sustainable ways of getting around. All of the implicated businesses plan to continue operating as California regulators continue their inquiry.