Herrera takes Turo to court for cheating their competition and SFO

Web-based rental car company refuses to get permit, pay fees, or follow traffic congestion rules, unlike all other ‘off-airport’ rental car companies operating at SFO

SAN FRANCISCO (Jan. 24, 2018) — City Attorney Dennis Herrera today filed a lawsuit against Turo, a web-based rental car company that is trying to game the San Francisco International Airport permit system that helps control traffic congestion, enhance safety for travelers and maintain airport facilities.
 
Turo, formerly known as RelayRides, Inc., relinquished its airport permit effective Aug. 10, 2017, and represented that it would cease operations at the City-owned airport, known widely by its three-letter international code, SFO. However, since then, Turo has continued to operate at the airport without the requisite permits in defiance of repeated warnings from City officials.
 
“Turo executives seem to think the rules don’t apply to them,” Herrera said. “They seem to think traffic congestion is someone else’s problem, and that their company doesn’t need to pay its fair share for the public facilities it is profiting off of. They couldn’t be more mistaken.”
 
“You don’t get special treatment just because you claim to be a disruptor,” Herrera said.  “The internet does not provide a free pass from regulations that every other business must follow.”
 
Why Permits?
SFO is one of the busiest airports in the world, with approximately 53 million travelers passing through per year. Given the number of people who use SFO’s roadways and facilities, the airport must regulate business operations on its property to ensure public safety, convenience and efficient operations. 
 
Traffic congestion is a serious concern. Tens of thousands of vehicles traverse SFO’s 1.5 miles of roadways on a daily basis.  For this reason, SFO imposes restrictions on individuals and entities that bring vehicles onto SFO property for commercial purposes.  Among other requirements, these entities must obtain permits, pay fees and comply with designated traffic routes.
 
As a condition of its permits, SFO requires all rental car companies to pick up or drop off customers at the Rental Car Center. Customers can travel from the terminals to the Rental Car Center via the AirTrain — a free light-rail system that connects SFO’s terminals, parking garages, Rental Car Center and BART station. This has significantly reduced traffic congestion at terminals.   
 
Off-Airport Rental Companies
There are two types of rental car companies that operate at SFO. Both are subject to a consistent set of permit and fee requirements.  “On-airport” rental car companies lease physical space at SFO’s Rental Car Center through a competitive bidding process. Other companies, called “off-airport” rental car companies, maintain headquarters outside SFO property but target SFO travelers and use airport roadways to collect and drop off their customers. 
 
Just like “on-airport” rental car companies, “off-airport” rental car companies must pick up their customers at the Rental Car Center instead of the terminal curbside. 
 
SFO imposes fees on rental car companies through the terms of its permits.  Both “on-airport” and “off-airport” rental car companies are required to pay an “AirTrain fee” of $18 per rental contract, which is passed through to customers, as well as 10 percent of gross receipts above a certain threshold for SFO rental car transactions.  “On-airport” rental car companies additionally pay rent to SFO to occupy space at the Rental Car Center. 
 
Turo Flouts Requirements
For years, Turo (formerly operating as RelayRides), held a permit to operate as an “off-airport” rental car company at SFO. In August 2017 it relinquished that permit and advised SFO by letter that it would cease operations at the airport.   
 
Instead, Turo has continued to operate at the airport and actively market it services to SFO travelers. Turo’s “Airport car rental” page on its website lists SFO as one of Turo’s “Top Airports.” Similarly, Turo’s “San Francisco” page lists “SFO Airport” as one of the suggested “Nearby Car Rental Locations.”  Lower down on the page, it says:  “Airport Pickup Available” followed by the names of the three major Bay Area airports, starting with SFO. Turo touts its “Curbside Delivery” at San Francisco International Airport,” with many of its more than 200 SFO rental car listings expressly offering to drop off or pick up the rental car curbside at terminals.  When prospective renters in San Francisco click the search box on Turo’s homepage to input their desired location, a dropdown menu populated by Turo lists “SFO – San Francisco International Airport” as the first suggested location.  
 
Violates State Law
According to the lawsuit filed in San Francisco Superior Court on Wednesday, Turo’s flouting of SFO’s permit requirements violates state law prohibiting unfair and unlawful business practices by giving Turo an unfair advantage over the seven other “off-airport” rental car companies they’re competing against, all of whom comply with the airport’s permitting requirements. It also adds to traffic at the airport and compromises funding for facilities maintenance and operation. Rental car fees are a major source of income for SFO, constituting approximately 11.5 percent of the airport’s operating budget in fiscal year 2016-2017.
 
“As a result of Turo’s willful noncompliance with SFO’s permit and fee requirements, Turo has been able to advertise and charge lower prices than competitor rental car companies who play by the rules — a textbook example of unfair competition,” Herrera’s civil complaint says.   
 
According to the complaint, Turo’s conduct harms not only its competitors, but also the public:

  • Turo has commercially exploited SFO’s roadways and facilities while depriving SFO of fees needed to maintain those facilities for public use. 
  • Turo’s continued participation in unlawful curbside pickups has contributed to congestion at the terminals and flouted rules designed for the safety and convenience of travelers. 
  • By actively promoting SFO rental car transactions after the expiration of its permit, Turo has misled both car owners and prospective renters about the lawfulness of such transactions and placed Turo car owners at risk of civil and criminal liability. 

“Turo’s practices contribute to congestion at SFO terminals, deprive SFO of funds needed for its operation and maintenance, and confer on Turo an unfair advantage over similarly situated businesses that operate lawfully and fairly,” Herrera said.
 
The City is seeking a court order prohibiting Turo from engaging in rental car transactions at SFO; making reference to SFO on its website, mobile application, or other promotional materials; and encouraging or facilitating SFO transactions in any other manner until Turo fully complies with SFO’s permit and fee requirements. The lawsuit also seeks civil penalties of up to $2,500 per violation, reimbursement for costs from the lawsuit and other relief. The lawsuit was filed on behalf of the People of the State of California under California Business and Professions Code section 17200.
 
The case is: People of The State of California v. Turo Inc., San Francisco Superior Court Case No. CGC-18-563803, filed Jan. 24, 2018. Additional documentation from the case is available on the City Attorney’s website at: sfcityattorney.org

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