NEW YORK—Melrose Credit Union is threatening to sue New York City for allowing “illegal hails” at the popular ride-sharing service Uber.
The $2.1-billion Melrose, which provides loans for taxi medallions, claims Uber’s electronic hails are illegal and has sent letters to the Taxi & Limousine Commission and New York Mayor Bill de Blasio threatening a suit if the city doesn’t act. Uber and other ride sharing services such as Lyft, have had dramatic effects on taxi cab revenue in some markets.
Melrose CU argues city law gives only yellow medallion taxis and “street hail liveries” (also known as green cabs) the right to accept hails from passengers — an exclusive privilege in exchange for hundreds of millions of dollars in revenue from medallion sales.
In January, the Taxi & Limousine Commission (TLC) defined in new rules that a hail is a request for a taxi through calling out, raising a hand — or using an electronic method like an app, according to the MCU letter. David Pollack, director of the Melrose taxi action center, told CUToday.info that the TLC has not been enforcing the new rule and Uber drivers are taking advantage.
Pollack described the situation facing cab drivers in this city, saying that recently, in two days via just a very small survey, there were more than 400 incidents of Uber vehicles “illegally” responding to street hails.
“Where is the enforcement of the new rule,” asked Pollack. “Where is the protection for the people who put their life savings into these medallions?”
Only a fraction of Uber’s trips go through its yellow-cab service, uberT. Most are done through its other services, which use black cars — even though city law forbids black cars from picking up hails.
Todd Higgins, one of the attorneys representing Melrose, described smartphone trips by black cars as an “unprecedented misappropriation of billions of dollars from taxicab medallion owners — a scheme that now threatens to collapse the industry.”
Melrose hopes the situation does no escalate into a lawsuit. “We are hoping to come to terms with the city,” Pollack said.
“Melrose Credit Union believes it is our responsibility to advocate on behalf of our members—the small businessmen, the individual medallion owners who scrimped and saved to get deposits together to buy medallions and partner with the city.”
Melrose is also involved, said Pollack, because it has a lot to lose if taxi businesses, and the value of medallions, suffer. Melrose holds the largest portfolio of taxi medallion loans in this city. “We will do whatever we can to protect the taxi industry in this city and our members.”
Pollack emphasized that Melrose is seeking only to make competition between Uber and taxi companies fair in The Big Apple. “We don’t want to destroy the competition. There is enough business for everybody. All we want is a level playing field.”
Previous reports have indicated that the value of taxi medallions in this city have been sliding since Uber arrived here, something taxi medallion CUs in New York have told CUToday.info they feel is a temporary issue and does not threaten the future of taxi medallion credit unions and taxi businesses.