California regulators continue to put pressure on transportation startups

The California Public Utilities Commission announced today that it issued two cease-and-desist orders to two Silicon Valley ridesharing companies during the last quarter.

KangaDo, the “Uber for Afterschool” app that offers to shuttle around children, was not licensed to operate in California, according to the CPUC’s statement.

KangaDo’s CEO Sara Schaer said that the company received the notice in April while it was still operating in private beta.

“We’re all in favour of following rules and regulations and, as such, we’re actually in pending status. That is why we are officially in private beta,” Schaer told Business Insider. “We’re not operating as a rideshare company pending final approval.”

The company is now working through the application process, which it submitted in June.

KangaDo isn’t a traditional ride-hailing company. The app is designed to connect parents to help arrange carpools, childcare and play dates. In March, the company began a limited private beta test in San Francisco of the ride service, which let parents pay $US10 to have a driver transport a child.

Another Uber for Kids startup, Shuddle, also reportedly received a cease-and-desist letter in November because it had failed to register with Trustline, a finger-printing background service, according to USA Today.
Other ride sharing services like Lyft and Sidecar had previously received cease and desist notices from the CPUC as early as 2012, but have since been approved by the regulator.

It all points to increased crackdowns by the CPUC as it tries to regulate companies that didn’t exist even a few years ago and are springing up in every corner of the state. In total, the CPUC issued 32 cease-and-desist letters aimed at various kinds of transportation companies in the second quarter, it said.

Leap Transit, the bus company known for serving Blue Bottle coffee and freshly pressed juice, was also issued a cease-and-desist order in May. It suspended its service shortly thereafter.

Wheras KangaDo has applied for a permit and hopes to publicly launch after it goes through, Leap’s situation looks a little more dire. The company posted three of its buses up for auction in June and is trying to sell its fourth and last remaining bus on eBay. Leap did not return request for comment.

California Public Utilities Commission has been tightening down on ride-hailing companies throughout the state. Last week, California gave Uber a 30-day notice and issued a $US7.3 million fine for not handing over records to keep its Transportation Network Company licence. Uber is not suspended though as it plans to appeal.

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