MANHATTAN (CN) - New York City's ban on advertisements in ride-sharing cars tramples on the First Amendment, a startup company claims in a federal lawsuit.
Vugo, based in Minneapolis, Minn., sprang into existence early this year, allowing drivers from Uber, Lyft and other ride-sharing platforms to make additional money on their fares by streaming targeted ads to their captive audiences: passengers.
The company boasts that its patent-pending TripIntent algorithms use data like pickup points, destinations and routes of the trip to select ads that are most likely to resonate. Passengers can click on the ads that interest them on the tablet screen, and drivers collect a percentage of the advertising revenue, according to Vugo's Oct. 20 lawsuit.
Since launching in May, Vugo's ads have been seen in cars driving around Los Angeles, San Francisco, Atlanta, Washington, D.C., Houston, Boston and other cities. But Vugo says that it has yet to launch in the Big Apple because of a Taxi & Limousine Commission ban on ads in "for-hire vehicles," which does not include traditional New York City taxi medallions.
Vugo's founder James Bellefeuille questioned the agency's general counsel, Sherryl Eluto, about the ban in a series of emails, according to the 10-page complaint.
Emphasizing that the commission has "no immediate plans" to lift the ban, Eluto warned, "As you can see from the rule, there is a penalty associated with displaying unauthorized advertising," according to the lawsuit.
Vugo says that Eluto did not give any rationale for the rule. Bellefeuille and Eluto are not parties to the complaint.
The startup claims that a "number of drivers" and "national advertisers" have shied off from their service for fear of a city clampdown.
Vugo seeks a declaration that the commission's rule violates its free speech rights. It is represented by John Cinti of Reger Rizzo Darnall LLP in Mount Laurel, N.J. Vugo is also represented by Minneapolis-based attorney Chad Snyder of Rubric Legal LLC.
A New York City Law Department spokesman said in an email that city has not yet seen the complaint.
"We will evaluate the claims once we are served," he said.
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