(The Chicago Tribune)—A Minneapolis technology company has sued the city of Chicago for banning advertising inside the private cars used by Uber, Lyft and other ride-share company drivers.
Vugo, founded in 2015 and looking to expand its digital advertising business to ride-sharing vehicles here, filed a federal lawsuit Thursday in Chicago, saying that the city’s ban on ads in and out of ride-share operators’ vehicles violates the company’s constitutional rights to free speech and equal protection. By contrast, ads are allowed in and on taxis.
“These regulations unfairly favor the taxi companies at the expense of ride-sharing drivers,” Jeffrey Schwab, attorney for Vugo, said in a statement. Schwab is an attorney for the Liberty Justice Center, a nonprofit legal organization that favors limiting government.
“There is no difference inherent in those services that justify banning advertising in one while allowing it in the other,” Schwab told reporters at a news conference.
The content adjusts for the type of trip that is being taken, that is, if a person is going to a sports event, ads “cater to that type of experience,” said Rob Flessner, co-founder of Vugo. Drivers receive 60 percent of the ad revenue, he said.
Vugo estimates that drivers can earn an average of $100 a month from the ads, according to the lawsuit.
Flessner said at the news conference that about 8,000 drivers use Vugo in Los Angeles, San Francisco and Minneapolis to supplement their income, which has declined in recent years because of increased competition.
“Drivers absolutely love Vugo,” Flessner said. “They love the opportunity to make more money.” He said the company hopes to expand by 20,000 to 25,000 drivers by the end of the year.
Chicago Law Department spokesman Bill McCaffrey said the city is still reviewing this lawsuit. He noted that the courts already have upheld Chicago’s right to regulate the ride-sharing industry differently from the cab industry.
“The city will vigorously defend its regulations, just as it has successfully done in previous cases,” McCaffrey said in an email. Anyone who violates the ban on commercial ads on or inside a ride-share vehicle can be fined $500 to $1,000.
The ban on ads in ride-share vehicles was part of a 2014 ordinance that gave some advantages to ride-share companies, and some to cabs. Rules for drivers under the ordinance are generally less stringent for ride-share companies. For example, cabdrivers must get criminal background checks that include fingerprinting; ride-share drivers do not.
Harry Campbell, who runs a popular blog for ride-share drivers called “The Rideshare Guy,” said the No. 1 complaint he hears from drivers is that their incomes have gone down. A recent survey the blog conducted of 1,100 drivers found that Uber drivers make about $15.68 an hour, and Lyft drivers, who can get tips, make about $17.50 an hour.
After expenses, ride-share drivers can get as little as $10 to $12 an hour, Campbell said. Even getting a dollar or two more per hour from ads could significantly boost driver income, he said.
“I’d hope they’d be allowed to move forward to Chicago and provide drivers with extra income,” Campbell said. He said Chicago is the country’s second largest ride-share market, after New York City.
The initial idea for the application came when co-founder James Bellefeuille worked as an Uber driver in Chicago, Flessner said. A restaurant owner suggested that Bellefeuille carry menus in his car, and Bellefeuille found that passengers would choose the restaurant because they liked what was on the menu.