Regulators Eye P2P Car-Sharing Platforms

Peer-to-peer car-sharing services might soon face the same regulation as traditional car rental companies.

According to The Wall Street Journal, startups Turo and Getaround, which allow car owners to rent out their private cars via apps, are embroiled in a battle with car rental giants, such as Enterprise Rent-A-Car-Holdings and Hertz Global Holdings.

Some cities and states are also getting involved. This month, for example, Maryland passed a bill that requires car-sharing companies to comply with regulations similar to rules for car rental companies, including paying sales tax. And last month in Illinois, an amendment to a bill about voiding damage waivers for car rentals changed the definition of renting, leading to the possibility of car-sharing services being taxed and regulated like car rental companies.

In addition, San Francisco sued Turo in January, saying that the company was avoiding the airport’s permit system and should be charged like a car rental business. Turo has countersued and the outcome is pending.

It’s not surprising that car rental companies are responsible for much of the action taken by both airports and states.

“Someone is renting a vehicle to another person for profit,” said Greg Scott, a lobbyist for the American Car Rental Association (ACRA), which represents Enterprise, Hertz and others. He added that P2P car-sharing services should “play by the same set of rules.” With that in mind, the association is supporting various bills to regulate car sharing and is talking to legislators, airports and cities about the issue.

But Turo and Getaround argue that they aren’t car rental companies and shouldn’t be subject to the same rules, adding that the proposed regulations are simply designed to put them out of business.

Turo is a “platform,” said Michelle Peacock, Turo’s vice president of government relations. “It’s a completely different way of doing business.” And Getaround CEO Sam Zaid said traditional car rental companies are using outdated consumer protection rules “as a weapon to block growth of the peer-to-peer movement.”

Peer-to-peer car-sharing services in North America have almost three million registered users, while the average vehicle spends only about 5 percent of its life on the road. Getaround claims that car owners can make up to $10,000 a year renting out their vehicles.