Lyft hits roadblock in New York days before launch

New York is putting the brakes on Lyft even before the ride-for-hire service hits the Big Apple's streets.

The city's Taxi and Limousine Commission issued a statement Wednesday warning drivers and passengers that the mobile app service has not been authorized for use within the city. The service, which announced Tuesday it would launch its service in New York on Friday, uses a mobile app to connect prospective customers with part-time drivers of private cars.

"Lyft has not complied with TLC's safety requirements and other licensing criteria to verify the integrity and qualifications of the drivers or vehicles used in their service, and Lyft does not hold a license to dispatch cars to pick up passengers," the commission said in its letter (PDF). "In keeping with the TLC's priority of protecting public safety and consumer rights, the agency will be conducting enforcement operations to ensure compliance with the City's rules and laws."

The letter goes on to warn passengers that Lyft vehicles have not undergone the commission's safety inspection nor has its drivers been subjected to the commission's drug and background checks. Drivers already licensed by the TLC risk losing their vehicles and TLC licenses and being assessed a $2,000 fine if they accept trip assignments through the service, the letter warned.

Lyft responded to the commission's letter by saying it didn't believe that the TLC's licensing rules applied to Lyft's business model.

"It's important to clarify that our differences of opinion are not about safety standards, and that's because we put safety first," the company said in a statement. "In new markets when we begin conversation with local regulators, we always find a way to ensure that communities have Lyft."

Lyft went on to make a safety commitment that includes reviews of drivers' criminal and driving records, vehicle inspections, and requirements that drivers maintain a business automobile liability insurance policy. Drivers will be allowed to accept only rides arranged through the app, the commitment states.

Ride services such as Lyft and Uber have grown in popularity in recent years and expanded to cities around the US and the world. Lyft, which launched in 2012, operates in 60 US cities and announced in April that it had raised $250 million in Series D funding.

But that journey has not been without regulatory bumps in the road. Virginia's Department of Motor Vehicles sent cease and desist letters to Uber and Lyft in June, warning them that they were operating in violation of state laws. The move was followed earlier this month by the Pennsylvania Public Utility Commission, which also hit both Uber and Lyft with emergency cease-and desist-orders to keep them from doing business in Pittsburgh.