Uber, Lyft Drivers Forced to Depend on Rental Companies after TLC’s Cap on Licenses

Jaspreet Singh Kalra
The Startup
Published in
5 min readJan 14, 2020
Tina Raveneau has been driving a ride share cab for over two years. She rents a Hyundai Elantra
from Buggy TLC Rentals in Brooklyn for $450 a week. Photo ©Jaspreet Kalra

When Tina Raveneau started driving for Uber in July 2017, she thought she had it all figured out. As a single mother, she needed a job with flexible hours so she could devote time to her son. Uber was promising just that; the flexibility of working when she wanted and the advertised promise of $1700 a week in take-home pay. So Raveneau quit her job as a store manager and started driving. She planned to rent a car first and then save up, so she could eventually buy one for herself.

Two years down the line, Uber’s promises have proved false. Her high-priced rental contract of $450 a week has cut into her earnings which, never reached Uber’s advertised $1700 a week.

But due to a move a by the city council, getting out of her rental contract is no longer an option. In August 2018, the City Council placed a cap on the number of cabs by ceasing the issuance of license plates for e-hail taxis. This was seen as a blow to Uber and Lyft because it was the first time that a major city moved to limit the number of rideshare vehicles.

New York city rules governing e-hail companies require licenses for both the car and the driver. Since the TLC would no longer license e-hail taxis, drivers like Raveneau are stuck in a financial bind with car rental companies.

According to TLC data, there are about 32,000 drivers in the city who rent or lease a TLC licensed car to drive. This represents 40 percent of all the rideshare drivers in the city.

As rules do not allow drivers to operate without TLC license plates, the rental companies do not only rent a car, but also effectively rent the license to operate with companies like Uber. Rental companies own fleets of cars with TLC license plates and rent them out to drivers on a weekly, sometimes even on an hourly basis.

For Raveneau, the cap meant that she was now tied to paying Buggy Car Rental, a Brooklyn based company which provides TLC licensed cars, $21,600 a year for her Hyundai Elantra. Meanwhile, the cost of owning a new Hyundai Elantra starts at $18,950.

High rental costs combined with a consistent dip in earnings has left Raveneau struggling to make ends meet. “I have considered going into public assistance but I really don’t want to,” said Raveneau. As opposed to having a flexible job, Raveneau now drives 10 hours a day, 7 days a week. She makes it a point to drive on weekends as the demand is higher. Her cousin watches over her son as she puts in the extra hours to make enough to pay her bills.

The Independent Drivers Guild, a collective which represents drivers’ interest in New York City, protested the introduction of a cap on vehicle licenses and demanded that the number of drivers be capped instead.

“What the vehicle cap does is empower predatory leasing and app companies at the expense of low income drivers,” stated Brandon Sexton, the IDG’s Executive Director in a July press release. The TLC dismissed the IDG’s concern and implemented a permanent vehicle cap in August, saying that it was necessary to ease congestion and increase drivers’ wages, which had been declining due to oversaturation in the market.

But the vehicle cap did not limit the number of drivers, as the TLC has continued to issue driver licenses. This has created competition amongst drivers for a limited number of cars with TLC license plates. This in turn makes the rental companies, such as Tower Leasing and Dryve TLC rentals, driver licensing agents with power to determine which drivers get to drive. If someone now wants to start working for a rideshare company in New York, they are bound to rent a vehicle due to the cap.

“The cap makes rideshare companies value the vehicle more than the driver,” said Muhammed Barlas, a member of the IDG. He said that the moratorium on vehicle licenses creates a taxi medallion like atmosphere.

“If I had known it was going to be this way, I’d have never started,” said Sloan Wells, an Uber driver who started with a rental car as well. She wanted to see how the work panned out before investing about $2500 in buying TLC plates for her own car, which at that time was under a bank loan.

Having to find space in her budget for the $425 per week car rental, she fell behind on her car installments. She thought that since rental costs were this high, she’d able to make the money off fares. But before she could save up to buy the vehicle license, a man with a badge, deputized by her bank, showed up at her door and told her she was losing her car. “All I could I say was, just take it man,” said Wells.

Sloan Wells driving her rental cab in Brooklyn on October 11, 2019. Wells drives with Uber and rents a car for $425 a week. Photo ©Jaspreet Kalra

She is now dependent on her rental car to keep working. “It’s still a struggle to pay the bills,” said Wells, noting that Uber has consistently reduced rates which has eaten into her earnings.

High rental fees pile on to other problems that drivers face. In August, the TLC demanded that rideshare companies lower the number of cabs driving empty on the road. In response Lyft, in June, and then Uber, in September, announced that they would begin to lock drivers out if they were in an area without enough “rider demand.” Getting locked-out can be precarious for drivers like Gary Stoutt, who uses a rental car to drive.

Stoutt has been driving with Uber for over two years now. But during one recent week, he could drive for only 3 hours because Uber kept him locked out. And he still had to pay $370 a week to rent a Hyundai Elantra. “On Sunday I had to choose between paying for the telephone, the TV or save to pay my car rent,” said Stoutt.

The rental cars have a built in kill switch which companies can use to deactivate the car if a driver cannot make rent on time.

Stoutt feared that he could lose his car by the end of the week if he couldn’t pay the rent. “I have been transporting people all my life,” said Stoutt. He used to drive trucks, Access-A-Ride vans, and also a school bus, but decided to move to Uber because it promised flexibility. He too wanted to save and get his own car, but that’s now a far-off dream.