May hasn't gone so hot for some of the sharing economy's most promising entrepreneurs. 2012 might have hinted of challenges to come, but so far 2013 has overdelivered. In the last two weeks, New York regulators and courts have essentially shut three of these companies down, at least temporarily.
SideCar Technologies, a donation-based rideshare start-up, ceased its New York business after a judge said even free rides from the company would violate the city's laws governing cars-for-hire, according to the Wall Street Journal.
Then last week, RelayRides, which allows car owners to rent out their vehicles, came under fire from the state Financial Services Department for what officials called "repeated false advertising and violations of insurance law, which are putting the public at risk." Basically: RelayRides told car owners that the company's insurance policy covered them 100 percent in the case of a car renter, say, mowing down a pedestrian, but the car owners could actually be found liable.
But the issue really came to a head this week, when a New York judge deemed vacation rental middle-people Airbnb illegal in New York City and New York state. Airbnb's services violate laws against underground and underregulated hotels, as well as a state-wide ban on short-term rentals enacted in 2011. Airbnb is now lobbying in Albany to change the law, but the East Village host who rented out his apartment for a few days and was made an example of got slapped with a $2,400 fine.
Last year, California cracked down on ridesharing and car-hire start-ups. The state hasn't shut them down -- it's looking for a way to regulate them within the current system -- but it's asking a lot of the same questions about insurance and liability that are vexing New York.