Fines dished out to ride-hailing apps over malpractice

Two online ride hailing companies, Didi Chuxing and Meituan Dianping, were each fined 100,000 yuan (US$15,911) by the city’s traffic authority for allowing illegal operations.

The punishment comes from either having cars that lacked local plates — a requirement in order to operate in Shanghai — or for unlicensed drivers.

The authority warned that if such foul play continues, the companies will have their operation certificates revoked.

On April 3, the law enforcement department of Shanghai Transport Commission launched “Operation Skynet II.” Officers went to 14 spots where they believed illegal online ride-hailing cars were more likely to frequent, including Hongqiao International Airport and Hongqiao Railway Station.

By just 10am they had discovered seven illegal operators outside Terminal 2 of Hongqiao Airport — neither the cars nor the drivers had the operation certificates. An officer with the traffic authority said the drivers simply created an account on Didi or Meituan and started picking up passengers.

Altogether 37 illegal cars were nailed throughout the city in the operation. More than two-thirds, or 29 cases, were related to Didi, while six cases involved Meituan. 

Dida Chuxing and Ucar Inc, another two ride hailing providers, were each caught with one case.

Since Meituan launched its ride-hailing business in Shanghai on March 21, voracious competition began among companies in the sector. Advertisements promising “rides with a low fee” occupied street billboards and smartphone screens.

Meanwhile, some passengers noticed something was not quite right about some of the cars. 

Displayed on the app as a car with a Shanghai plate, some cars that showed up had a totally different, non-local plate. Many of the drivers didn't carry Shanghai hukou (permanent residency) as required. Authorities estimate about 40 percent of all online ride-hailing cars have this problem.

These drivers faced a 10,000 yuan fine and their driver’s licenses were supsended for three months. They will also be blacklisted on the city’s resident credit system, which will possibly impact on the public services they once had access to.

Such punishments don't seem tough enough to deter the drivers, however. Several drivers from Didi told Shanghai Daily the company will pay the penalty for them.

Didi did not comment on the drivers’ claims.

According to the traffic authority, this is the ninth 100,000 yuan penalty Didi Chuxing has received since regulations on online ride-hailing services took effect in 2016.