The San Francisco Business Times reported in April that FlightCar, a San Mateo startup that rents out air travelers’ cars for them in exchange for free parking and a car wash had raised $5.5 million in a Series A venture financing round led by General Catalyst Partners. FlightCar, founded by three teenagers, launched earlier this year and became the latest entrant in what Time magazine called the “sharing economy.”
Time reported last month that FlightCar is one of multiple peer-to-peer sharing businesses that have come under fire recently from traditional companies who claim that the upstart operations are exploiting unfair advantages. The online technology publication All Things Digital reported that San Francisco City Attorney Dennis Herrera filed a lawsuit against FlightCar on behalf of the state of California for unlawful and unfair business practices, seeking penalties and injunctive relief. Doug Yakel, public information officer for San Francisco International Airport, told ABC News that the startup refuses to play by the rules that govern other rental car companies because it does not pay the same fees or abide by the same regulations. Deputy City Attorney Jennifer Choi told ABC News that FlightCar’s response is due July 1 and a court will decide if the company is in violation of California’s Unfair Competition Law if no resolution is reached by then.
Some of the other “sharing economy” companies that have been dealing with legal problems this year include the ride-sharing service SideCar, the peer-to-peer rental car service RelayRides and the social networking lodging service Airbnb. In February, the city of Austin, Texas, sent SideCar a cease-and-desist letter that accused the company of being an illegal taxi service. Time reported that RelayRides CEO Andre Haddad announced in May that the company was suspending operations in New York State after being accused of “noncompliance with certain unique aspects of NY insurance law.” And less than a week after RelayRides stopped making reservations for New York vehicles, a judge in the Empire State ruled that Airbnb user Nigel Warren broke an “illegal hotel” when he rented out his bedroom in is East Village apartment for three days and ordered him to pay a fine of $2,400.
What do you think of these “sharing economy” businesses? Share your thoughts with us in the comments below. If you are considering your own startup and have legal concerns, contact our firm at (323) 653-3900 or complete the form on this page to let our Los Angeles unfair competition lawyer review your case.
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