California deems carpooling via all ride-share services illegal

Uber, Lyft and Sidecar are told to halt any carpool features. The California Public Utilities Commission confirms it sent two copies of a warning letter to all three peer-to-peer car services.

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Lyft began testing a carpool feature called Lyft Line in San Francisco in August. Lyft

California regulators have sent warning letters to Uber, Lyft and Sidecar to say that their new carpool features are illegal.

Sidecar revealed Thursday that it received the letter from the California Public Utilities Commission, which said the ride-sharing service was breaking the law by testing its new Shared Rides, or carpool, feature.

A Lyft spokesperson told CNET that it too received a similar letter. Initially, Uber told CNET that it didn't get the letter but now the company says it was indeed contacted by the CPUC. The CPUC also confirmed with CNET that it sent two copies of the letter to Uber -- one to company CEO Travis Kalanick and one to Chairman Garrett Camp -- on September 8.

"Uber recently announced its intent to offer a new transportation service known as UberPool," the CPUC letter reads. "Uber has not yet approached the Commission regarding the UberPool service... Uber's proposed transportation service violates existing California law."

Basically, the CPUC says that under California law it's illegal for these ride-sharing services to charge passengers an individual fare when carrying multiple people in one vehicle. If the companies would like to add a carpool feature, they first have to request an adjustment to their existing permits with the CPUC or petition the state legislature to modify the law.

Uber, Lyft and Sidecar all unveiled carpool features last month. The three companies say the feature lets strangers in multiple locations, but heading the same direction, share rides and split fares -- saving passengers up to 50 percent per ride. Uber's service is dubbed UberPool, while Lyft's is called Lyft Line and Sidecar's is named Shared Rides.

A Sidecar spokesperson told CNET that it's now reviewing its options about how to proceed with its carpool feature. A Lyft spokesperson said it wants to work with the CPUC to remedy the situation.

"We welcome the opportunity to discuss this new form of shared transit with President Peevey and the CPUC to ensure that residents continue to have access to this innovative and sustainable transportation option," the Lyft spokesperson told CNET.

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