Ride-hailing app Empower, a popular but controversial alternative to Uber and Lyft, could face more than $36 million in civil penalties as Maryland regulators continue trying to crack down on the company.
The state’s Office of People’s Counsel, which represents consumers in regulatory disputes before the Public Service Commission, is recommending the steep fine on the company as a penalty for facilitating rides through its software in violation of a state order to cease operating. In a filing before the Commission last week, they also recommended tacking on $1 million for each day that the company continues to operate.
In a written response, Empower called the proposed fines “punitive and grossly disproportionate.” In an email on Monday, Empower CEO Josh Sear declined to comment further.
It’s unclear when the Commission could decide on the proposed fines. A representative for the regulatory body declined to comment Monday about the active case.
The recommendation marks the harshest volley yet in a yearslong fight over how to regulate Empower, and could alter the local rideshare landscape. Empower executives wrote to the regulatory board in September, saying that their software helped connect drivers to more than 300,000 customers per week across Maryland — nearly half of all for-hire rides in the state.
Empower, which bills itself as a technology firm that sells access to software, has refused to register with the state as a company that provides transportation services. It claims that its business model is fundamentally different than that of companies like Uber or Lyft, and therefore should not be subject to the same regulations.
The state hasn’t bought it. In July, Public Utility Law Judge Amy Schaeffer ordered the company to cease operations in Maryland while the case continued. On Friday, the Commission made that order final.
Unlike other ride-hailing companies, Empower does not provide commercial auto insurance for drivers because it does not treat them as employees or contractors. Rather, the company insists that they are customers using software, and Empower instructs them to purchase the appropriate insurance on their own.
Regulators say the state is unable to verify that drivers using Empower’s platform are properly licensed and are using safe vehicles with the correct insurance coverage. They have suggested that drivers may not understand the need to acquire additional commercial auto coverage on their own, leaving them and their passengers effectively uninsured during a for-hire ride.
Empower, however, contends that the state has not provided any evidence of actual harm resulting from drivers and riders using their software. They also question why regulators have not interrogated Uber’s safety record in the same way it has pursued Empower’s.
On Monday, the Empower mobile application continued to show drivers available for rides in Baltimore.
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