Uber Exits Austin, Could Impact Other Cities. Do You Agree With Uber’s Reasons?

Like many folks, I received an email that Uber is leaving Austin because of new city rules requiring fingerprinting of their drivers.

I’ll explain how it might affect Uber everywhere…and even other sharing-economy businesses like Airbnb.

New Rules for Ride-Sharing Companies in Austin

Uber has suspended services in Austin after the city voted to pass a law requiring their drivers to be fingerprinted.

If you look for an Uber ride in Austin, you’ll get a message that there are “No Pickups” available.

Other cities in Texas, like San Antonio and Houston, have passed similar laws.  And Atlanta, Chicago, and Los Angeles, are considering the same regulations.

Last year, Uber left San Antonio but returned a few months later after the city started a program that made fingerprinting voluntary for drivers.

A Look at Both Sides of the Issue

Advocates of fingerprinting say it’s for the safety of passengers.  They argue that Uber’s current background checks aren’t thorough enough.  And because taxi drivers are fingerprinted, Uber drivers should be too. Folks against fingerprinting argue that more regulation isn’t good for customers, because it cuts down on competition.  And that Uber takes business from taxi companies simply because it offers a better service.

According to a Wall Street Journal article, Uber believes these types of laws will discourage new drivers from signing-up.

Because driver turnover is high, they have to consistently sign-up new drivers to keep up with demand.

Fingerprinting is required for Uber drivers in New York and Houston, which Uber says is the reason fewer drivers are signing-up, causing longer wait times for its customers.

Uber Says Its Driver Background Checks Are Better and Cheaper

Uber argues its background check system is more thorough and efficient than fingerprinting.  And they claim using a fingerprinting system, like taxis do, is too slow and expensive.

Some have even pointed to the DUI industry as a reason lawmakers might be supporting rules to make it more difficult for Uber.  They say there’s been a decrease in DUIs in certain areas with Uber, and there’s a lot of money involved in DUIs including ticket fines and attorneys’ fees.

My Experience With Uber

I’ve used Uber in Austin and found it to be a cheaper and better experience than taxis.  I’ve spoken to a number of Uber drivers in Austin too, and most were folks driving part-time for extra cash.

For example, I rode with a man who turns his car into an Uber on his way home from his regular job.  And with a woman who is a school teacher and picks up riders on her way to work and in the summer.  I’ve (luckily!) never had an issue with an Uber driver.

I find Uber especially helpful when traveling because of the GPS tracking which shows you a map of where you’re going as you drive.  You don’t have to know the city’s layout or where it might be more or less difficult to hail a cab.  The Uber driver comes to you.

I also like that you always pay for an Uber by credit card!  So you can earn bonus points on the travel purchase.  Because in some cities you might not be able to find a taxi that accepts cards.  And if you do, you have to wait to sign the receipt.

The Future of Sharing-Economy Businesses Like Uber and Airbnb

The issues Uber and Uber drivers are facing are similar to those Airbnb and its hosts face.

Like Uber, Airbnb’s business is based on the sharing-economy.  That is, a business built on the concept of folks sharing resources, like cars and houses.  And Airbnb doesn’t heavily regulate its listings or hosts.

But a number of cities in the US have already started restricting folks from listing entire homes or apartments for rent on a nightly basis.  Like in New York, where some Airbnb listings violate the city’s short-term leasing law.

If more cities pass laws like the ones in Austin and New York, sharing-economy companies like Uber and Airbnb might have to adjust way they operate.

If more regulations leads to fewer Airbnb listings and Uber drivers, prices could increase for consumers because there will be less competition.  But more thorough background checks could also make things safer.   

An Airbnb Host’s Perspective

My friend is an Airbnb host, and she has been watching closely as more cities create laws like these.  She said she doesn’t really mind if Airbnb required her to be fingerprinted.  She aims to do whatever makes travelers more likely to book with her and makes her guests feel most comfortable.

That said, she thinks there’s a fine line between too much and too little regulation, and she doesn’t want Airbnb to increase its fees because of more red tape in the system.  That wouldn’t be good for hosts or travelers!

What I Think About Fingerprinting

As for other economy-sharing businesses, like Uber, I believe there can be a happy medium between folks on both sides of the argument.

I like the idea of making fingerprinting available but optional.  That way drivers (and Airbnb hosts too) could opt-in if they wanted, and get some type of special “verified” mark on their profile.  Uber riders could then decide for themselves whom they’re comfortable riding with.

Bottom Line

Uber has left Austin because of a new city law requiring they fingerprint their drivers.  Uber maintains their driver background check is safer and cheaper.  And that using the same system as taxis will result in fewer drivers because of longer wait times.

Sharing-economy companies like Uber and Airbnb often have lower prices than taxis and hotels because their costs are lower.  And because regular folks can participate as drivers and hosts without paying large fees up front.

Do you think Uber and Airbnb should be regulated the exact same way as cabs and hotels?  Or do you think this will limit competition, leading to higher prices and fewer choices for customers?