Last updated: 08:09 PM ET, Sun October 04 2015

FTC Chair Proposes 'Targeted' Regulations for Uber/Airbnb-Style Services

Impacting Travel | Michael Isenbek | October 04, 2015

FTC Chair Proposes 'Targeted' Regulations for Uber/Airbnb-Style Services

PHOTO: Uber protest in Mexico. (photo via Twitter/CirculoRojo_mx)

In the brave new world of “sharing economy” (aka, “peer-to-peer” or “on-demand”) services like Uber and Airbnb, Fed­er­al Trade Com­mis­sion (FTC) chair Edith Ramirez asserted that regulations are necessary, but must be carefully applied, as to not stifle companies using similar business models, Brendan Sasso of the National Journal reported.

Speaking at Ford­ham Uni­versity Law School in Manhattan Friday, Ramirez warned against levying “leg­acy reg­u­la­tions on new busi­ness mod­els,” Sasso said, drawing from a copy of her remarks.

According to Sasso, the FTC chief believes a regulatory balance must be found between freedom to forge new ground as a business and protecting the consumer.

Ramirez stated, “We must al­low com­pet­i­tion and in­nov­a­tion in the form of these new peer-to-peer busi­ness mod­els to flour­ish … at the same time, where ne­ces­sary, tar­geted reg­u­lat­ory meas­ures may be needed to en­sure that these new busi­ness mod­els have ap­pro­pri­ate con­sumer pro­tec­tions; but they should be no great­er than ne­ces­sary to ad­dress those con­cerns.”

Ramirez said that these consumer protections included aspects of health, safety and pri­vacy.

Sasso noted that new regulations might come from agencies other than the FTC. He stated that while it “does have au­thor­ity over is­sues like pri­vacy and data se­cur­ity,” the FTC also advises state and loc­al agen­cies on how to enforce reg­u­la­tions without affecting com­pet­i­tion.

The National Journal writer called Ramirez’s remarks “the latest tent­at­ive at­tempt by poli­cy­makers to try to grapple with the ex­plo­sion of ‘shar­ing eco­nomy’ apps.”

That is, apps that connect buyer and seller directly, with no intermediary.

In the travel industry, well known ‘sharing economy’ services include Uber, Ly­ft, and Side­car, which are car-hailing companies and Airb­nb, a room booking service.

But local regulators around the world have balked at the way they do business, Sasso said. Taxi drivers and ho­tels say they have an un­fair ad­vant­age by avoiding costly reg­u­la­tions. Sasso cited Uber as an example, and pointed out that the service has been banned in several cities and executives are facing criminal prosecution in France.

Sasso said Ramirez put forth the argument that ex­ist­ing regulations can reinforce old busi­ness mod­els and keep con­sumers away from new ser­vices.

The National Journal writer said she also warned that agen­cies could be greatly in­flu­enced or even con­trolled by in­dus­tries already in place that are being regulated.

But she also ar­gued, according to Sasso, that the gov­ern­ment “pick­ing win­ners” by regulating only older com­pan­ies “should be just as un­desir­able.”

In the end, Sasso said Ramirez acknowledged that find­ing a proper middle ground is “com­plex and chal­len­ging” and has “no simple an­swers.”

Friday’s speech by the FTC head comes less than a week after the House En­ergy and Com­merce Com­mit­tee’s trade sub­com­mit­tee “struggled to find the right ap­proach to reg­u­lat­ing these new ser­vices,” as Sasso put it.

Mi­chael Bur­gess (R-Tx.), chair of the subcommittee, “ac­know­ledged” the need for “lim­ited gov­ern­ment over­sight” of sharing economy services, Sasso said. But Burgess ad­ded, “I for one am more con­cerned about ex­ist­ing reg­u­la­tions hurt­ing new jobs than I am about the need for new reg­u­la­tions.”

Sen. Mark Warner (D-Va.), has pushed for dis­ab­il­ity in­sur­ance and oth­er be­ne­fits for on-demand employees, according to Sasso, but has also requested a “reg­u­lat­ory time-out” to give the legislative body time to come up with the proper rules.


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