The Attorney General of New York State, Letitia A. James, has accused New York City of fraud and demanded compensation for taxi medallion owners. What Happened New York City’s (N.Y.C.) Taxi and Limousine ...
New York Attorney General Accuses NYC Of Taxi Fraud, Demands $810M To Be Paid To Drivers
BenzingaFebruary 21, 2020, 5:51 AM EST
The Attorney General of New York State, Letitia A. James, has accused New York City of fraud and demanded compensation for taxi medallion owners.
New York City’s (N.Y.C.) Taxi and Limousine Commission sold medallions, which permit taxi drivers to ply the city’s famous yellow cabs as investments and promised steady growth to the buyers. These medallions were auctioned at extremely high prices between 2004 to 2017, the New York Times reported.
Criticizing the practice, James said, “The very government that was supposed to ensure fair practices in the marketplace engaged in a scheme that defrauded hundreds of medallion owners, leaving many with no choice but to work day and night to pay off their overpriced medallions.’’
The state attorney general came down heavily on the city’s government and said that medallions were sold at inflated prices despite warnings having been raised internally.
The executive director of the New York Taxi Workers Alliance, Bhairavi Desai, accused the city of “deep betrayal.” Desai said that the city had not taken action against “predatory practices” and had left Uber Technologies Inc. (NYSE: UBER) and LYFT Inc. (NASDAQ: LYFT) “completely unregulated.”
Why It Matters
In the fiscal year 2014, N.Y.C. sold 350 million taxi medallions generating $359 million in revenue, according to the New York Times.
Medallion prices have fallen from the record $1.3 million per medallion in 2014, leaving drivers in debt.
A spokesperson from Mayor Bill de Blasio’s office said that the taxi crisis began under Michael R. Bloomberg, who is currently running for president, the Times reports.
In August 2018, N.Y.C decided to cap Uber and Lyft vehicles on city roads. The cap was imposed in 2018 for one year but extended again in 2019.
The limit on ride-sharing services is supported by N.Y.C. Mayor Blasio who said that he wanted to prevent app companies from taking advantage of hardworking drivers.
Uber shares traded 0.64% lower at $40.66 in the after-hours markets on Thursday. The shares had closed 0.33% higher, at $40.92.
Lyft stock fell 0.55% and closed at $45.22 in the after-hours session on Thursday. The shares closed the regular session 1.67% lower at $45.47.
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