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Carpooling with Sidecar? Regulators say not so fast

California regulators issue a warning to the peer-to-peer car service saying it's illegal to operate its Shared Rides feature. Are Uber and Lyft next?

San Francisco resident and ride-sharing enthusiast Kenny Liao poses next to his car, which he uses to give rides as a Sidecar driver. Courtesy of Kenny Liao

Though ride-sharing services like Uber, Lyft and Sidecar made their peace with California regulators a year ago, it seems there may be a new battle afoot.

The California Public Utilities Commission sent a warning letter to Sidecar on Wednesday saying it was breaking the law by testing its new Shared Rides, or carpool, feature.

The letter says that under California law it's illegal for "charter-party carriers" to charge passengers an individual fare when carrying multiple people in one vehicle. The CPUC also says Sidecar never requested a modification of its existing permit to provide the additional Shared Rides service.

Basically, what this means is that it's going to be difficult for ride-sharing services to offer customers the option of carpooling with strangers and sharing a fare.

Sidecar began testing its Shared Rides feature in San Francisco in May and started promoting the option last month. In August, the company said that 13,000 passengers have used its app to share a ride with a stranger and split the fare -- saving them up to 50 percent on rides. The service is still in its testing phase.

A Sidecar spokesperson told CNET this was the first time the company had heard of any CPUC issues with its Shared Rides feature. And the peer-to-peer car service is concerned that certain state laws could stifle innovation.

"Our biggest reservation about agreeing to be regulated by the CPUC was that it would slow down our ability to continue to innovate," the spokesperson told CNET. "This letter demonstrates our fears were founded."

Uber and Lyft also announced in August that they were rolling out similar carpool features. Uber spokeswoman Eva Behrend told CNET the company hasn't received a warning letter from the CPUC and that Uber would like to work with regulators to allow for carpool services.

"While we haven't been contacted by CPUC, we welcome the opportunity to work with them to craft a framework that embraces the significant benefits of uberPOOL and helps bring its unmatched convenience and affordability to communities and traffic jams across the Golden State," Behrend said.

CNET also contacted Lyft for comment and will update this story when we get more information.

Nearly two years ago, news broke that the CPUC issued cease and desist letters to Uber, Lyft and Sidecar. After a yearlong battle, the car-sharing services and California regulators finally came to an agreement that allowed the burgeoning ride-sharing industry to exist as long as it adhered to set safety standards. But apparently that agreement didn't mean the end of the road in regard to regulations.