Peer-to-peer Carsharing Illegal in New York State?

Peer-to-peer carsharing may be illegal in New York State according to the Department of Financial Services. They issued Relay Rides a cease-and-desist letter last week after which the company suspended all carsharing in the entire state of New York.

Innovation, by its nature, does not always fit within existing structures. Although we’ve been careful to ensure the protections offered to our member community comply with legal frameworks around the country, we learned in conversations with the NY Department of Financial Services that it believes there is noncompliance with certain unique aspects of NY insurance law.

Relay Rides website now announces "RelayRides has car rentals across the country, except New York."

Pando Daily suggests that this may not have much chilling effect on the industry: Relay Rides is still going strong in California, Massachussets, Pennsylvania, DC, Georgia, Washington, Oregon, Illinois, Colorado and Texas and more. Just last week, they acquired rival peer-to-peer carsharing company Wheelz. Getaround, the other major peer-to-peer car rental company, does not offer service in New York state and so isn't affected by this issue. Peer-to-peer carsharing will continue to grow, but New York will be missing out on innovative transportation options. Startups in the transportation space may look elsewhere when considering where to locate.