Lyft pays $300k to get New York off its back

One downside of reinventing an industry is that you can sometimes forget that the red tape you're bravely circumventing was put in place for a reason. It's a lesson that Lyft has learned the hard way after being fined $300,000 by New York for operating a taxi service without the proper insurance. As far as Attorney General Eric Schneiderman is concerned, ride-sharing outfits are welcome in his state, but only if they're making sure they obey the rules and ensure that their customers are safe.

That means that, from now on, all Lyft drivers will have to have the proper insurance -- supplied by a business operating and regulated within New York State. As part of that, the company can't offer, sell or provide insurance for drivers if said policies aren't governed by New York insurance law.

The list of obligations doesn't end there, since Lyft will now be obliged to give authorities three weeks' notice whenever it plans to expand into a new city. Officials in Buffalo and Rochester felt aggrieved when the company set up shop there in April 2014 without even so much as a courtesy call and a basket of fruit.

If you hadn't noticed, as these ride-sharing companies have grown in stature, so has the target that's planted on their backs. There's plenty of accusations involved, including not paying drivers fairly, not observing the nuances of employment law, not taking safety seriously enough and not respecting the established players in the market. Still, these growing pains are worth it given the pile of cash that's waiting for the winner at the end of this battle.

[Image Credit: AP]