Turo

The City and County of San Francisco keeps coming up among AutoSlash blog posts as the least car-friendly city imaginable -- legislating the highest possible price on free rental days, suing Hertz for a problem that was largely caused by the City and County, legislating rental cars because of rampant car theft from all cars (here, here, and here), and we even had joked about Enterprise heading off one of the hypothetical lawsuits we had projected on San Francisco's behalf. Then San Francisco sues peer-to-peer platform Turo for "cheating competition" at San Francisco International Airport, where "cheating competition" in San Franciscoese translates in the rest of the world as "not giving the airport authority enough money".


Some people (SFO Airport Commission) got to have it.

Here at AutoSlash, we're already fairly confident that I'm already persona non grata in San Francisco after the line "actual human hearts might be stolen if left in a car in San Francisco" earlier this month. I'm probably permanently excluded just as if San Francisco were a casino (one is gambling leaving items in a car there). So here's the completely unvarnished baseline interpretation of San Francisco's new lawsuit against Turo from a layperson's point of view.

There's a reason rental cars (including award days) are so expensive at San Francisco International Airport. The airport authority extracts (sounds better than extorts) $18 for the AirTrain plus 10% of all revenue earned by the rental car company on each rental. Then there's the "voluntary" tourism assessment and honest-to-goodness sales taxes, as this $25.89 Hertz car more than doubles in cost to become $52.05 after the government's involvement. 


The Fee Detective weeps at tax/fee burdens exceeding 100%.

Here's how the cash rolls in for the San Francisco Airport.

  • The Airport wants Turo to pay $18 for the AirTrain plus 10% of revenues like an on-site rental car company.
  • Use an Off-Airport rental car company? Your fees will include the $18 for the AirTrain, 10% of revenues, and the shuttle bus (included in your rates, of course) has to pay an additional $3.35 per trip.  
  • The Airport only charges Transportation Network Companies (like Uber and Lyft) $3.80 per trip
  • Turo occupies a part in California state law that's neither a Transportation Network Company nor a rental car company.

The City and County of San Francisco want to charge Turo as a rental car company. However, the vehicle owners offering vehicles under services like Turo hold a different role under the law in the State of California -- a lawful "personal vehicle sharing program" -- and unlike the TNC's and rental car companies, are not commercial entities unless the proceeds from a company like Turo exceed the total cost of ownership in a year. It's right there in California law and thus forms the basis of Turo's response -- Turo does what's required by the law, and San Francisco interprets Turo's actions to follow the state law as constituting a rental car company. Turo did make one combination strategic error, however -- cancelling the previous agreement and allowing San Francisco to file the first lawsuit.

As Turo allowed San Francisco to file the initial lawsuit, the company instead had to countersue. In their countersuit, Turo links directly to the provision of insurance code that shows personal vehicle sharing programs are not rental car companies. They point to an aspect of the California State Constitution that says only the voters of the State can approve new taxes. And they pull out the nuclear option of stating San Francisco officials are simply doing the bidding of major rental car companies (namely, Enterprise) to protect those same rental companies from new innovations.

One might ask "don't State laws and the State Constitution override city/county interpretations"? The City and County of San Francisco respond "ha"!

Turo believes the City and San Francisco is out-of-range with their interpretation that the vehicle owners should be punished as a rental car company when State law says the vehicle owners are non-commercial entities. Turo admittedly would be happy with a fee closer to that charged to the Transportation Network Companies ($3.80 per trip) -- there's precisely the same burden on the 1.5 miles of San Francisco International Airport roadways of a commercial Uber and a non-commercial "personal vehicle sharing vehicle" making that loop. Turo has no desire to accept the taxes and fees as if a rental car company if state law says they are not a rental car company (and on that count, we agree). And as long as San Francisco continues their fight against cars (whilst not fighting against crime), we'll probably continue to use the unofficial titleholder of "World's Loudest Underground System" on our future visits.  

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