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Uber, Lyft cease operations in Austin after voters require background checks

Ride-hailing companies Uber and Lyft suspended operations in Austin, Texas, early Monday after voters decided overwhelmingly that their drivers should be subject to fingerprint-based background checks.

An estimated 10,000 to 15,000 drivers, supplementing their incomes using the app-based services in the Texas capital, are waiting to see the next moves made by both the companies and the city.

But the vote, 56-44 against the ride-hailing companies' attempt to overturn a city ordinance ordering the more stringent checks, is likely also being parsed in cities across the country, particularly those planning similar moves to regulate this fast-growing industry.

It is the first time voters have been asked to give their opinion on a debate that pits safety concerns and arguments that traditional taxi services are being driven off the job by a consumer-driver service whose success is based on its streamlined, largely unregulated model.

Only two other cities, New York and Houston, require fingerprint-based checks. After Houston introduced its ordinance, Lyft pulled out, but Uber remains. Both operate in New York.

Proposition 1 in Austin asked voters to allow Uber, Lyft and other ride-hailing services to operate without drivers being subject to fingerprinting to search for any criminal background. This would have overturned an ordinance passed by the City Council in December.

Ridesharing Works for Austin, funded almost entirely by Uber and Lyft, spent $8.6 million campaigning in favour of Proposition 1, according to campaign finance reports. That was 80 times more than those opposed spent, and is the largest amount ever spent on a vote in the city, eight times more than the previous record.

Uber and Lyft argued, as they have done when under pressure in other cities, that their third-party background checks are sufficient; that forcing part-time drivers to undergo fingerprint checks would be unduly burdensome; and that their app-based system means a driver is tracked all the time, in real time, adding to security for passengers.

Opponents claimed third-party checks, based largely on social security numbers, are not good enough. Potential drivers with criminal records can slip through and have done so, according to one report published by the San Francisco Attorney General’s office.

“The people have spoken tonight loud and clear,” Austin Mayor Steve Adler tweeted Saturday night, after the Proposition 1 vote.

Speaking to reporters, Adler said: “We’re at a place right now where we welcome Uber and Lyft to stay in the community, and I hope that they’ll continue to talk with me.”

He added: “We need TNCs (transportation network companies) in this community so we have mobility choices. But how we’re going to do that and who we do that with, obviously, at this point, is something that we need to work on and work out.”

“Disappointment does not begin to describe how we feel about shutting down operations in Austin,” Uber Austin general manager Chris Nakutis said in a statement.

“We hope the City Council will reconsider their ordinance so we can work together to make the streets of Austin a safer place for everyone.”

Lyft spokeswoman Chelsea Wilson said in a statement: “Lyft and Austin are a perfect match and we want to stay in the city. Unfortunately, the rules passed by City Council don’t allow true ride-sharing to operate.”

Lyft said it “pause[d] operations” in Austin as of 5 a.m. Monday. Uber said it ceased operating at 8 a.m.

The huge amount of money spent by the ride-hailing companies reflects their concern that other major cities are contemplating stricter regulations, including fingerprint-based checks carried out, necessarily, by government agencies.

Los Angeles Mayor Eric Garcetti and two city lawmakers in March wrote the California Public Utilities Commission that they support stricter rules. The commission is weighing the issue.

In Chicago, 30 city council members have introduced legislation that would require drivers using ride-hailing services to get a chauffeur's license and submit to tougher background checks, fingerprinting and vehicle inspections

Uber responded that, if passed, the legislation would "spell the end of ride-sharing in Chicago as we know it today."

Atlanta is proposing a new ordinance requiring fingerprinting of drivers that pick up passengers at the city’s Hartsfield-Jackson International Airport.

An upstart app-based ride-hailing company has promised to take advantage if the two industry behemoths pull out of Austin.

"We're not going to be the donkey or the elephant," Jonathan Laramy, the chief experience officer for Get Me LLC, told the Texas Tribune before the vote. "We're here to stay.  Vote Prop. 1, vote Prop. 2 — we don't care."

Laramy said Get Me is prepared to have drivers undergo fingerprint-based background checks if they are "fast, easy and cost effective." Ahead of the vote, Austin Mayor Adler  promised that Uber and Lyft drivers using their apps would get free and fast checks.