T&Eitem2
February 4, 2016
Worksession
MEMORANDUM
February 2, 2016
TO:
FROM:
SUBJECT:
Transportation, Infrastructure, Enejl7
~~onment
Committee
Josh Hamlin, Legislative
Attome~
_.
Worksession:
Expedited Bill 53-15, Taxicabs
Credit Card Transactions
Expedited Bill 53-15, Taxicabs - Credit Card Transactions, sponsored by Lead Sponsors
Councilmembers Eirich, Riemer and Navarro, was introduced on December 8, 2015. A public
hearing was held on January 19.
Bill 53-15 would:
(1)
limit the amount a licensee may charge a driver or affiliate for processing a
credit card transaction;
(2)
amend the requirements for credit card processing systems in taxicabs; and
(3)
generally amend County law concerning taxicabs.
Expedited Bill 53-15 would refine existing provisions of the law related to processing
credit card payments for taxicab service. These provisions were added to the law by Expedited
Bill 53-14, which was enacted earlier this year and substantially revised Chapter 53. Specifically,
the Bill will prohibit licensees from charging drivers and affiliates more than the actual cost to the
licensee for processing a credit card transaction, and will make it easier for drivers to use their own
credit card processing systems.
Background
The County's taxicab law was substantially revised in 2015 by Expedited Bill 53-14. That
Bill made a number of changes aimed at improving conditions for drivers and allowing the taxicab
industry to better compete with transportation network companies such as Uber and Lyft.
Expedited Bill 53-14 established a Taxicab Services Commission to evaluate the economic
condition of the taxicab industry and the adequacy of service rendered by the industry. The Bill
also made a number of changes to the requirements of taxicab leases and operating agreements,
including requiring the County Executive to establish standardized lease/affiliation agreements,
maximum lease and affiliation rates and permissible ancillary fees that may be charged to drivers.
The Bill also provided for the issuance of new passenger vehicle licenses to increase the number
of accessible taxicabs on the road.
Among the driver protection provisions included in Bill 53-14 were changes to the law
aimed at
(1)
limiting the premium that fleets could pass along to drivers for processing credit card
transactions and; (2) making it easier for drivers to choose their own credit card processing
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mechanism. Under the law as amended Bill 53-14, a fleet or association may not charge a driver
more than "1
%
over bank, merchant services and equipment provider fees paid by the licensee on
any credit card transaction." ·Also, the law now allows drivers to use their own credit card
processing systems, provided the systems: ( 1) are compliant with all applicable tax laws; (2) accept
payment through any County user-side subsidy program ("Call-n-Ride"); and (3) are approved
by the Director of the Department of Transportation (DOT).
It
is these provisions that this Bill
proposes to modify. This Bill would provide that fleets and associations may only charge drivers
the amount paid by the fleets for processing credit card transactions (effectively changing the "1
%"
to "0%" in the existing law) and would remove the requirement that
all
credit card processing
systems accept Call-n-Ride payments.
Public Hearing
A public hearing was held on January 19, at which there were four speakers. Acting DOT
Director Al Roshdieh testified on behalf of the County Executive, stating that the Executive "does
not object to this bill," but expressing concerns for possible unintended consequences (see ©8).
To address these concerns, he requested two amendments to the Bill, which will be discussed
below. Lee Barnes ofBarwood Transportation testified in opposition to the Bill, raising questions
about the definition of "processing" and pointing out that fleets incur more costs on credit card
transactions than just the fee charged by a financial institution. Mr. Barnes also expressed concerns
that the amendments proposed in Bill 53-15 would result in taxicabs having no way to process
Call-N-Ride
1
transactions, and would call into question the purpose of the Taxicab Commission
created by Bill 53-14 (see ©9-10).
Beth Levie of the AFL-CIO spoke in support of the Bill, providing hypothetical examples
of the impact of credit card processing charges imposed by fleets on driver income (see ©11-12).
2
Peter Ibik, President of the Montgomery County Professional Drivers' Union, also spoke in
support of the Bill, echoing Ms. Levie's statements, and pointing out that, when using fleet credit
card processing systems, drivers do not get paid immediately for credit card transactions, as they
do for cash payments. Mr. Ibik noted that this delay in payment to drivers presents an impairment
to the drivers' ability to make their daily rent payments, and that allowing drivers to use their own
processing systems would remove this impairment.
Issues for Committee Discussion
.1.
Should the allowed premium on credit card transactions be eliminated?
Expedited Bill 53-14, as referred to the Council by the T&E Committee favorably (2-1),
would have capped the amount that a fleet could charge a driver for credit card processing at 5%
of the transaction. This cap was requested by a group of drivers as part of a post-mediation position
statement, and is similar to the 5% cap imposed by the City of Alexandria (see ©14). Before
passage, however, the Bill was amended by the full Council to limit the amount of premium over
costs that a fleet could charge a driver, rather than set a hard 5% cap on the charge. In moving the
Call-N-Ride is the County's "user-side subsidy program, which assists ... Participation
in
County user-side subsidy
programs in mandated by
§
53-222, which provides, in its entirety: "Any fleet or association must participate
in
the
County's user-side subsidy programs, as required by applicable regulations."
2
Barwood provided a counterpoint to Ms. Levie's examples, which indicates that fleet-wide, 43% of fares are
collected by credit card transaction (see ©13).
1
2
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amendment, Councilmember Katz expressed a view that 5% might actually be too high, given his
understanding of processing charges for credit card transactions. As enacted, Bill 5 3-14 limited
the amount a fleet or association could charge a driver to "1
%
over bank, merchant services and
equipment provider fees paid by the licensee on any credit card transaction."
In October 2015, after this change went into effect, Barwood sent a message to drivers
informing them of the new law and, among other things, describing how Barwood would charge
credit card fees to drivers in light of the changes in the law (see ©15-16). Barwood's message
said that credit card fees would be charged as the "Technology Marketing and Service Fee"
(TMSF), which includes "all equipment provider costs, such as bank merchant fees, credit card
charge-back fees, transaction fees and air time fees, plus all fees for Call-n-Ride processing." In
accordance with the law which allowed them to recover their costs plus 1%, Barwood informed
drivers that the TMSF fee would be 7.45%.
In response to Barwood's message, seven members of the Council sent a letter to Acting
DOT Director Al Roshdieh, expressing concern about the amount of the charge and inquiring about .
the Department's progress in identifying alternative credit card processing systems that could
accept payment through the County's user-side subsidy program (see© 17-18).
3
The Montgomery
County Professional Drivers' Union also weighed in, with a letter to Acting Director Roshdieh
questioning the legitimacy of the amount of the TMSF and the restrictions on drivers' use of their
own credit card processing systems (see ©19-24).
As mentioned above, this Bill would effectively reduce the 1% premium over costs
currently allowed to 0%, providing that "a licensee must not impose on a driver or affiliate a charge
of more than the fees paid by the licensee for processing any credit card transaction ... " At the
public hearing, Acting Director Roshdieh said that DOT currently does not have the ability to
verify that companies are in compliance with the law, and requested an amendment to require the
fleets to certify to the Director that they are complying with the law.
4
Staff agrees that such an
amendment would strengthen the law, but still questions whether the certification would be
effective in ensuring compliance.
In addition to the concerns stated by Acting Director Roshdieh, Lee Barnes expressed
concern over the term "processing," pointing out that "the fee charged by a financial institution is
just one of the many costs taxicab companies incur when customers pay by credit card." Mr.
Bames's concern about the possible ambiguity in the use of the word processing, although the Bill
could be amended to simply remove the "l
%
over" from the existing law, accommodating the
other charges that
Mr.
Barnes alluded to, but eliminating any premium collected by the fleet.
5
Council staff believes that the Committee made a well-founded recommendation when it
considered Expedited Bill 53-14, and recommends a return to that position. Amending the Bill to
prohibit a licensee from imposing on a driver or affiliate charges totaling more than 5% of a credit
card transaction would provide drivers with relief that staff believes was intended by the enactment
of Bill 53-14, while providing clarity and ease of administration.
3
The memorandu111 was signed by Councilmembers Katz, Eirich, Leventhal, Berliner, Hucker, Navarro, and Riemer.
This amendment was also suggested by Associate County Attorney Robert J. Birenbaum in his memorandum to
Acting Director Roshdieh, dated January
5,
2016 (see ©25-26).
5
It
is worth noting that, if the Bill is enacted to simply remove this premium, Barwood drivers will still be paying
6.45%, significantly more than the
5%
cap recommended by the Committee in its consideration of Bill 53-14.
4
3
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Staff recommendation:
Amend lines 4-8 of the Bill as follows:
(f)
A licensee must not impose on a driver or affiliate:
(1)
[[a charge of]] charges totaling more than [1
%
over bank,
merchant services and equipment provider] [[the fees paid
by the licensee [on] for processing any credit card
transaction]] 5% of any credit card transaction; or
2.
Should the reguirement that all credit card processing systems accept payment through
County user-side subsidy programs be removed?
Expedited Bill 53-14 added the existing language, which allows drivers to use their own
credit card processing systems,
6
provided the systems:
(1)
are compliant with all applicable tax
laws; (2) accept payment through Call-n-Ride; and (3) are approved by the Director of DOT.
During Committee worksessions, DOT requested language requiring that any system accept Call-
n-Ride payments. This requirement has had the unintended effect of prohibiting drivers from using
their own processing systems, as commonly used personal systems such as Square
7
are not
currently capable of accepting these payments. Drivers say the ability to use such systems is
important for two reasons: (1) to reduce their cost of processing the transactions
8 ;
and (2) to
eliminate the lag time between the transaction and the time the driver receives payment.
9
The Bill,
as introduced, simply removes the requirement that credit card processing systems accept Call-n-
Ride, but does not change the requirements of § 53-222 that "[a]ny fleet or association must
participate in the County's user-side subsidy programs,
as required by applicable regulations."
(emphasis supplied)
Both DOT and Lee Barnes of Barwood expressed concern at the public hearing that the
Bill as introduced could have the unintended effect of reducing the number of taxicabs capable of
accepting Call-n-Ride payments.
10
DOT has requested that language be added to the Bill to
expressly require that all taxicabs licensed to or affiliated with fleets and associations subject to
the participation requirements of§ 53-222 be able to accept Call-n-Ride payments. Council staff
believes that, given the language in § 53-222, the Executive could impose the requirement that
For a brief discussion of why drivers may wish to use their own processing system, such as Square, and the legal
status of its use in some jurisdictions, see http://www.geekwire.com/2014/taxi-drivers-seattle-allowing-customers-
pay-square/
7
Square is marketing its service specifically to Taxicab drivers: see https://squareup.com/taxi-credit-card-processing
8
Square currently charges 2.75% per transaction.
9
Square provides an "instant deposit" that virtually eliminates any lag: https://squareup.com/pos/pavments/instant-
deposit
10
According to DOT, Call-n-Ride has 5,400 participants, of whom approximately 75% are age 67 and over. The
remaining participants are persons with disabilities between the ages of 18 and 66. The Call-n-Ride program provides
roughly 10,500 trips per month, for which participating fleets are reimbursed, in aggregate, about $200,000 per month.
Fleets required to participate in the program are Earwood, Regency, Action, and Sun.
6
4
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taxicabs be equipped to accept Call-n-Ride payments by regulation.
11
However, given the
importance of protecting Call-n-Ride participants' access to transportation, staff agrees that it is
appropriate to include the requirement in the law.
Adding this requirement (which, as a practical matter, already exists through§ 53-222 and
the regulations, while facilitating drivers' ability to process their own credit card transactions may
disrupt the business arrangements currently in place between some fleets and their processing
services. Mr. Barnes indicated that Barwood's provider, Verifone, would remove their equipment
if it was only used to process Call-n-Ride transactions. Verifone would do this, according to Mr.
Barnes, because the provider has an expectation that the equipment will generate significant
revenue from credit card transactions, and makes it profit from .those transactions.
If
drivers begin using their own processing systems to process credit card transactions, this
sort of relationship would likely have to evolve to a subscription system where the provider is
compensated directly by the fleet or association. The fleet or association would then pass that cost
on to the driver in the lease, or as an additional charge approved by the Director. Mr. Ibik, in his
letter to Acting Director Roshdieh, proposed that drivers would pay the cost of the equipment
through a payment of 1% per transaction paid to the fleet. This proposal is problematic in that it
would still require the fleet to assume the risk that such payments may not cover the cost of the
equipment, leaving the fleet to cover any shortfall. Another alternative may be for the County to
identify and contract with a provider, and include the cost of the equipment in the annual fee
required for the PVL or, possibly, the Driver Identification Card. In any event, this shift will
almost certainly result in an increase in upfront expenses for drivers to cover the costs where such
a new arrangement is required.
One additional concern expressed by Mr. Barnes should also be considered. When a driver
uses his or her own credit card processing system, and a customer has a problem with the
transaction, that customer will likely contact the fleet. The fleet, which in these circumstances
would have no control over the payment, would not be able to directly assist the customer in
resolving the conflict, beyond referring the customer to the driver or attempting to mediate the
dispute. A fleet could also direct the customer to initiate a payment dispute with the customer's
credit card, which would then trigger (at least in Square's case) an existing dispute resolution
procedure.
12
However, a shift to drivers using their own credit card processing systems could
increase customer service costs for the fleet, and it would likely be the fleet that a customer would
hold at least partially responsible for the wholly independent actions of its drivers.
As mentioned above, DOT has requested that the requirement that each taxicab be
equipped to accept Call-n-Ride payments be clearly addressed in the law. Council staff believes
that such an amendment would preserve the ability ofCall-n-Ride participants to obtain necessary
transportation. While it is still unclear what the cost of requiring compliance while decoupling
credit card transactions from Call-n-Ride would be, such cost should be borne by each driver as
an independent contractor. With this consideration in mind, staff recommends Committee
approval of the Bill with the following amendment.
Staff recommendation:
Add the following language immediately after line 10:
Existing regulations for participation in County user-side subsidy programs are at COMCOR 53.223.01 through 03
(see ©27).
12
11
hlt!?.~.;/Lf?.9J!.m:~.!:JD..&9.m/J.1~J12/J1.§[9.D/.m:t!f..!9.0.§.~_2:!:~.§Q.!.Y.!!!g,:P..!l)'.!n~!}l:QiS.PJI1~.§
5
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53-222. User-side subsidy programs - participation.
.UU
.(!;U
Any fleet or association must participate m the County's user-side subsidy
programs, as required by applicable
regulations~
and
each taxicab affiliated with, or operating under
f!
license issued
:ill..
.§:
fleet or
association that is required to participate in
~
County's user-side subsidy program
must be equipped to accept payment through the program.
*
*
*
This packet contains:
Expedited Bill 53-15
Legislative Request Report
Fiscal and Economic Impact Statement
Public Hearing Testimony
Af
~M~
Lee Barnes
Beth Levie
"Barwood Driver Income: AFL-CIO Assumptions vs. Actual Data"
Drivers' Post-mediation Position Statement (abridged)
Barwood message to drivers
Councilmembers' memo to Al Roshdieh, October 23, 2015
MCPDU letter to Al Roshdieh, November 12, 2015
County Attorney Bill Review Memorandum, January 5, 2016
COMCOR 53.223.01
F:\LAW\BILLS\l
553
Taxicabs - Credit Card Transactions\TE Memo.Docx
1
3
4
8
9
11
13
14
15
17
19
25
27
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Expedited Bill No. -"-"'--'-"------
Concerning: Taxicabs - Credit Card
Transactions
Revised: 12/03/2015
Introduced:
-~~}Q§[J;h~~-­
Expires:
--~~~~----
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: - - - - - - - - - -
Sunset Date:
_.:..:.~=--------
Ch. _ _ , Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsors: Councilmembers Eirich and Riemer
AN EXPEDITED ACT
to:
(1)
limit the amount a licensee may charge a driver or affiliate for processing a
credit card transaction;
(2)
amend the requirements for credit card processing systems in taxicabs; and
(3)
generally amend County law concerning taxicabs.
By amending
Montgomery County Code
Chapter 53, Taxicabs
Sections 53-218 and 53-313
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deleted.from existing law by original bill.
Added by amendment.
Deleted.from existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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EXPEDITED BILL NO.
53-15
1
Sec 1. Sections 53-218 and 53-313 are amended as follows:
53-218. Responsibility of licensees, affiliates, and drivers.
2
3
4
*
(f)
(1)
*
*
A licensee must not impose on a driver or affiliate:
a charge of more than [1
%
over bank, merchant services and
equipment provider] the fees paid by the licensee [on] for
processing any credit card transaction; or
(2)
any other charge of a type or amount other than those on the list
adopted by regulation under Section 53-111.
5
6
7
8
9
10
11
*
*
(b)
( 1)
(2)
*
*
*
*
53-313. Passenger receipts; credit card transactions.
12
13
14
15
16
17
18
19
20
Any system or service used to process credit card transactions must:
be compliant with all applicable tax laws; and
[accept payment through any County user-side subsidy program;
and
(3)]
be approved by the Director.
*
*
*
Sec. 2. Expedited Effective Date.
The Council declares that this legislation
is necessary for the immediate protection of the public interest. This Act takes effect
on the date when it becomes law.
Approved:
21
22
23
Nancy Floreen, President, County Council
Date
0
f:\law\bills\1553 taxicabs - credit card transactions\bill 1.docx
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LEGISLATIVE REQUEST REPORT
Expedited Bill 53-15
Taxicabs
-
Credit Card Transactions
DESCRIPTION:
Expedited Bill 53-15 would refine existing provisions of the law
related to processing credit card payments for taxicab service. These
provisions were added to the law by Expedited Bill 53-14, which was
enacted earlier this year and substantially revised Chapter 53.
Specifically, the Bill will prohibit licensees from charging drivers
and affiliates more than the actual cost to the licensee for processing
a credit card transaction, and will make it easier for drivers to use
their own credit card processing systems.
Some PVL licensees continue to charge drivers and affiliates
substantial fees for processing credit card transactions.
Ensure that taxicab drivers and affiliates are able to reliably process
credit card transactions at the lowest cost.
MCDOT
To be requested.
To be requested.
To be requested.
To be researched.
Josh Hamlin, Legislative Attorney
To be researched.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENAL TIES:
NI
A
f:\law\bills\1553 taxicabs - credit card transactions\lrr.doc
(j)
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ROCKVILLE, MARYI.A'l\JD
MEMORANDUM
January 15, 2016
TO:
Nancy Floreen, President. County Counci
FROM:
~
Jennifer A. Hughes, Director. Office of Ma etnent
an.~ ~~get
Joseph F.
Beach, Director, Department
of ·
nc~~
..
FElS
for
Bill 53-15E, Taxicabs-Credit Card
Transactfu
SUBJECT:
~
Please find attached the fiscal and economic impact statements for the above-
.referenced legislation.
JAH:fz
cc:
Bonnie
Kirkland, Assistant Chief
Administrative
Officer
Lisa Austin, Offices of the County Executive
Joy
Nunni~
Special
Assistant
to the
County
Executive
Patrick Lacefield, Dire.ctor, Public
Information Office
Joseph F. Beach, Director, Department of Finance
Al Roshdieh, Acting Director, Department of Transportation
David Platt, Department of Finance
Brady
Goldsmith,
Office of
Management
and Budget
Ale.x Espinosa,
Office
of Management and Budget
Naeem
Mia. Office of Management and Budget
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Fiscal Impact Statement
Expedited Bill 53-15, Ta.xicabs - Credit Card Transactions
1.
Legislative
Summary.
This bill will limit taxi cab
fleet
owners from charging drivers more ihan. what they are
charged
by
banks for
credit
card processing
2.
An
estimate of
changes in County revenues and expenditures regardless of whether the
revenues or expenditures
are
assumed in the recommended or approved budget. Inc1udes
source ofinformation, assumptions, and methodologies used.
None
3. Revenue
and
expenditure
estimates
covering
at least the
next
6 fiscal years.
None
4. An actuarial
analysis
through
the
entire amorti7,ation period
fpreas;Q:.bil,Lthat~ohld
affect
retiree pension or group insurance costs.
·
·
N.A.
5. An
estimate of
expenditures
related to County's
information
teclmology
(IT)
systems,
including Enterprise Resource Planning (ERP) systems.
None
6. Later actions that may affect future. revenue and expenditures
if
the bill authorizes future
spending.
None
7. An
estimate
of the
staff
time
needed
to
implement
the bill.
None
8.
An
explanation of how the addition of new staff responsibilities would affect other duties.
No new staff responsibilities
9.
An
estimate of costs
when.
an additional appropriation is needed.
None
10. A description of
any
variable that could affect revenue 'md cost estimates.
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None
11. Ranges of revenue or expenditures
that
are uncertain or difficult to
pr~ject.
None
12.
If
a bill is likely to have no fiscal impact,
why
that
is
the case.
This is an amendment to an already existing law and is meant to give
taxi
drivers more
protection from what the fleet owners can charge them. No funds pass through the County.
13. Other fiscal impacts or comments.
None
14. The following contributed to and concurred vvith this analysis: Anthony Alexiou, DOT
-1/J5-/r---=l'2-...-.
-
Date
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Economic Impact Statement
Bill 53-tSE, Taxicabs - Credit Card
Transactions
Background:
This legislation would limit the amount a licensee may charge a driver or affiliate for
processing a credit card transaction
and
amend the requirements for credit card
processing systems in taxicabs.
Bill 53-1 SE
amends Section 53-2
J
8 of the County Code
such that a licensee may not impose <ma driver or affiliate a charge of more
than the
fees
paid
by
the licensee for processing
any
credit card transaction.
l.
The sources of information, assumptions, and methodologies used.
The source of infonnation is the Montgomery County Department of Transportation
(DOT). There
a.re
no assumptions or methodologies used in the preparation of the
economic impact
stat~ment.
The redm.iion in the charges that a licensee receives for
processing a credit card transaction is offset
by
the decrease in the driver's cost to
operate the taxicab. Therefore, there is a revenue loss to
the
licensee but an equal
gain to the driver because of the reduced fee.
2. A description of any variable that could affect the economic impact estimates.
There are no variables that could affect the economic impact estimates. \.V1rlle there
is a negative economic impact on the licensee, the impact is directly offset
by
a
positive economic impact on
the
driver;
3. The Bill's positive or negative effect,
if
any on employment, spending, saving'S,
investment, incomes, and property values in the County.
Bill 53-15E would have no economic impact on employment, spending, savings,
investment, incomes, and property values in the County. It is a zero sum economic
impact~.
on.e agent gains a benefit (reduced transaction cost) while the other agent
losses a benefit (reduced transaction fee).
4.
If
a Bill is likely to have no ecQnomic jnipact,
why
is that
the case?
Plea'3e see
para!:,~ph
#3.
5. The following contributed to or concurred
with
this analysiS:
David
Platt and Rob
Hagedoom, Department Finance; Tony Alexiou, Department of Transportation,
ritf2+·
Pagel of l
I
/.,
I
[k ___
.
(j)
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Testimony of County Executive Isiah Leggett
Bill 53-15
January 19, 2016
Good afternoon Council President Floreen and Council Members. My name is Al Roshdieh and
I am the Acting Director for the Montgomery County Department of Transportation. I am here
today testifying on behalf of County Executive Isiah Leggett regarding Bill 53-15 and its
proposed amendments to Sections 53-218 and 53-313 of the County Code.
The County Executive does not object to this bill. He is concerned, however, about the
unintended consequences of this bill for the County's seniors and disabled residents who rely on
Call-N-Ride for their transportation needs.
Expedited Bill 53-15 amends the County Code to preclude taxicab companies from imposing
upon drivers any charges in excess of the fees paid by the taxicab companies for processing
credit card transactions. This
part
of the law is clear, but the Department needs the ability to
verify that the companies are in compliance with the law. At the very least, we request that the
bill be amended to include a requirement that the companies certify to the Department that they
are not adding additional processing fees over and above what they are paying.
The Bill also repeals the current requirement that every system used in a taxicab to process credit
card transactions also be able to process payments for the County's "Call-N-Ride" program. The
Call-N-Ride program offers subsidies to low-income persons who are elderly or have disabilities
and need transportation for medical appointments. The Call-N-Ride program only processes
subsidy payments through electrQnic means because the previous paper voucher system was
susceptible to fraud and abuse.
In
order to avoid disruptions in service to those who are eligible
for and heavily rely on the Call-N-Ride program, the Bill should be amended to require that a
system be in place to process Call-N-Ride payments.
Thank you for the opportunity to express the Executive's views on this Bill. My staff and I look
forward to further discussing these points in greater detail during the T &E Committee session in
February.
{j)
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BARWOOD
Testimony of Lee Barnes
EXPEDITED BILL 53-15, TAXICABS-CREDIT CARD TRANSACTIONS
*
January 19, 2016
Good afternoon Madam President and Council members. I'm Lee Barnes, President of
Barwood Transportation. Thank you for allowing me to express my concerns with Bill
53-15 and to respectfully ask that you vote against this legislation.
53-15 raises more questions than it answers. It reflects an oversimplified perception of
how credit card transactions are processed. It calls into question the continuance of
Call-N-Ride. It oversteps the authority given to the newly created Taxicab Commission
and places an even greater burden on locally regulated taxi service.
First, the bill adds the term "processing" to Chapter 53, as it relates to credit card fees.
But what exactly does processing mean? The law that went into effect less than four
months ago referred to "bank, merchant services and equipment provider fees." 53-15
replaces that language with "processing" yet provides no definition of the word.
The most important thing to understand is this: The fee charged by a financial institution
is just one of the many costs taxicab companies incur when customers pay by credit
card. We also pay fees for the credit card terminals, as well as for the secure software
used to process the transaction and collect the data required by County and federal law.
DRIVEN FOR EXCELLENCE
1
4900 Nicholson Court, Kensington, Maryland 20895 • 301. 984.8294 • 800.521. 9077
http://www.barwoodtaxi.com
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The second question relates to the unintended consequence that 53-15 will have on
providing Call-N-Ride services. The bill eliminates the requirement that a credit card
system accept payment for County subsidized services. Many drivers are now using
technology such as Square to take customer payments, even though this method has
not been approved by DOT. If this is the direction the Council wishes to take, Barwood
will no longer be able to maintain the safer and more secure credit card equipment
currently in the back seats of our taxis.
Here's why: First of all, while popular with some drivers, technology such as Square
doesn't allow for processing County-subsidized services. If we are only to use our
equipment for processing Call-N-Ride - which does not generate revenue for taxi
companies - we will not be able to fulfill our revenue obligation with the equipment
provider. They will remove their equipment, leaving the County with no way to process
Call-N-Ride services. Surely that is not the Council's intention.
Third, Bill 53-15 calls into question the purpose of the Taxicab Commission. Just last
year the Council created a Taxicab Commission to examine issues such as this and
provide recommendations. I ask that the Council give the Commission the opportunity to
do its work before considering more new laws that hurt the taxicab industry and could
negatively impact County services.
I am more than willing to sit down with each member of the Council to discuss the
breakdown of our credit card transaction costs and what is actually charged to the driver
so the Council can make an informed decision on Council Bill 53-15.
Thank you for your consideration.
2
DRIVEN FOR EXCELLENCE
4900 Nicholson Court, Kensington, Maryland 20895 • 301. 984.8294 • 800.521. 9077
http://www.barwoodtaxi.com
.4-li-',
"~_f"_,'
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Beth Levie, 9402 Russell Rd Silver Spring 20910, blevie@aflcio.org 202 285-3667
My name is Beth Levie. I work for the National AFL-CIO and live in
Montgomery County. I am testifying in favor of expedited Bill 53-15. In
recent years, the AFL-CIO has been working to help organize hundreds of
thousands of workers in this Country that are classified as independent
contractors. These workers have no legal right under US law to earn
minimum wage; are not covered by workers' compensation, overtime rules
or other workplace protections; and do not receive social security or
unemployment benefits. One of the ways these workers gain protections is
through legislation such as the legislation that was signed into law this
summer. We thank the council for voting 9-0 for reforms that will regulate
the taxi industry through uniforms leases and caps on rent and other fees,
and a fair dispute resolution system.
Lowering the credit card rates have always been central to the drivers'
struggle. Why, because more customers want to use their credit cards;
accepting payment is mandated by County law; and a company with a high
credit card ran can decrease a driver's income by 10°/o or much more.
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For example a driver works
338
days and takes in
$82,000
in fares and
$4453
in tips together its
$86,453.00.
Drivers estimate that currently
70o/o
of
all fares paid with credit cards. In our example, that would be
$60,517.
Barwood charges drivers
7.45°/o
which would be
$4,508
credit card costs to a
driver. When you take rent in to consideration --
$33,000 -
and the cost of gas
- about
$14,000 --
the driver is left with
$39,453.
Subtract
$4508
in credit
card charges and now he is taking home
$34,945.
That's
13%;
not
considering other fees and other expenses which would make the credit card
expense an even larger portion of his take home income.
It
looks even worse for a driver what takes in only
$54,000
in fares and
tips. Using the
70%
estimate, that means
$37,800
of his fares and tips via
credit card, yielding
$2,816
credit card charges. After subtracting
$33,000
in
rent,
$10,000
for gas, and
$2816
in credit card fees, the drivers is left with
$8,184.
His credit card fees would represent
31
%
of his earnings.
The County can do something about this and bring fees charged to
drivers in line with other merchants' fees for credit card use. Please pass
legislation that works to lower credit card cost to drivers.
@
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BARWOOD DRIVER INCOME: AFL-CIO ASSUMPTIONS VS. ACTUAL DATA
1/27/16
Assumptions
AFL-CIO
Actual
Actual
Average Barwood Driver
Barwood Driver
Hypothetical Driver
2014
2014
$82,000 Annual Revenue $82,083 Annual Revenue $69,224 Annual Revenue
Annual Days Worked (Meter Days)
Fares Collected
Tips Received
(by
credit card - does not include cash tips)
Total Driver Revenue (less cash tips)
Percentage of Fares Collected
by
Credit Card Transaction
Gas (see
*
and
**)
Lease Fees or Rent
Estimated Credit Card Charges
Net Earnings
338
$82,000.00
$4,553.00
$86,000.00
70.00%
-$14,000.00
-$33,000.00
-$4,500.00
$34,000.00
331
$82,083.00
$4,454.00
$86,537.00
38.87%
-$6,315.80
-$24,500.00
-$2,536.21
$53,184.99
320
$69,224.00
$4,047.00
$73,271.00
43.00%
-$6,315.80
-$24,500.00
-$2,366.42
$40,088.78
Assumption of gas cost of
$14,000/$2.00
per gallon=
7,000
gallons used. At MPG of
19,
this means the driver would have
driven
133,000
miles in one year.
*
AFL-C/O Assumption:
**
Barwood Data: Drivers average
60,000
miles per year, divided by
19
miles per gallon=
3160
gallons x
$2.00
=
$6,315.80
CONFIDENTIAL
&
PROPRIETARY
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SHERMAN, DUNN, COHEN. LEIFER&YELLIO. P.C.
Hon. John M. Glynn
November 13, 2014
Page 3
Standard Lease Cap Rates. An Owner of a Taxicab can charge a lease rate to a
Driver that is not greater than the following Standard Lease Caps:
$105, for all 12-hour day shifts
$115, for the 12-hour night shift on Sunday, Monday and Tuesday
$120, for the 12-hour night shift on Wednesday
$129, for the 12-hour night shifts on Thursday, Friday and Saturday
$630, for any one-week day shift for one week or longer
$737 for any one week night shift for one week or longer.
-
?
2.
Drivers should be able to determine their own means to accept credit cards,
and a 5% maximum charge to drivers should be imposed where a company's
terminal is used
As you know, the majority of cab drivers in Montgomery County are forced to
pay exorbitant fees to process credit card transactions. Those fees can range from
5% to as high as 7.9% (8.5% in some instances) for Earwood drivers. Your report
should recommend that the County set certain standards that must be met and
allow drivers the freedom to choose a credit card terminal that best fits their needs.
If,
however, the drivers are forced to use company terminals, then the county should
set the maximum credit card fee at 5%. That type of system is consistent with those
in surrounding jurisdictions.
For example, in Alexandria, Section 9-12-32(t)(l) of the Alexandria Virginia
Taxi Ordinance mandates a 5% maximum percentage credit card fee if a certificate
holder mandates that its affiliated drivers
use
a specific credit card processor.
It is important
to
remember that each driver in Montgomery County is
treated as an independent contractor. Although the drivers understand the
County's need
to
mandate that credit cards be an acceptable form of payment, as
independent contractors, the drivers should be the ones to determine how best to
meet such a mandate. It is the drivers, and not the fleet companies, who depend
upon the customers' fare to run their business. The City of San Francisco has
recognized this very basic idea.
Section 1124-(d)(l) of the San Francisco
Transportation Code stipulates that a driver has the right to choose a credit card
payment processing merchant account service so long as it conforms to the
standards placed by the city. No fleet company, under the San Francisco Code, may
retaliate against a driver for electing, or not electing, to establish his or her own
credit card processing account.
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Page 1 of3
BARWOOD
TAXI SE RV ICE
301.984.1900
Follow Us:
Dear Valued Driver,
On Tuesday, July, 21, 2015 Expedited Bill 53-14 was signed
into law. There have been many rumors about these
changes. This communication will separate the myth from
the facts.
What You Need to Know
Effective Date of the changes:
There are several changes but they are effective at
different times. Changes are either:
• Effective upon approval by the Director of
Montgomery County's Department of Transportation.
• Effective October 1st, 2015
More individuals can own PVLs
PVL ownership is no longer restricted to only 20% for
individuals. The County will issue new PVLs over the next
six months.
However, NEW PVLs are not transferable, meaning
they can NEVER BE SOLD.
If you get a new PVL from the County you can't sell it, will
it to your children or spouse, you can only run it as a taxi.
Existing PVLs will be grandfathered in, meaning IF you
currently own a PVL or buy a PVL that was first issued
before January 1st, 2015 then you are allowed to sell
that
PVL for its value.
So now is a good time to own a PVL that still has value! We
have a list of available PVLs. If you're interested in owning,
email ptp@barwoodinc.com or call Vanessa Curtin 240-514-
1232.
PVL Leasing
The County is currently designing regulations for leasing a
PVL. They expect to be finished with these regulations in
approximately 3 months. Therefore you will have to wait 3
months or longer to lease a PVL. As soon as we have more
information, we will let you know.
However, keep in mind there are more advantages to
owning a PVL.
Card Swipe Devices
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Page 2of3
There has been a lot of misinformation about the use
of card swipe devices, such as Square. Here are the
facts:
• All devices MUST be approved by Montgomery
County's Director of Transportation
• All devices MUST be able to integrate with the fleet
dispatch system and must integrate with and accept
user side-subsidy programs like, Call N Ride
• Per Chapter 53 Code section 53-313. Any system or
service used to process credit card transactions MUST
meet these requirements.
• It
is a violation of Chapter 53-313 to use non-
approved swipe devices.
Fees
There is NO change to current lease rates. There are
rumors that lease rates were lowered by the County. This is
NOT true.
The Department of Transportation will set a
maximum
lease
rate but as a private business, each fleet and affiliate owner
will individually decide what they charge to lease their
vehicles. This will be based on their brand, dispatch and
costs.
Credit Card Fees
Barwood's Technology Marketing and Service Fee (TMSF)
covers all equipment provider costs, such as bank merchant
fees, credit card charge-back fees, transaction fees and air
time fees, plus all fees for Call N Ride processing.
Per Chapter 53-218, we are allowed to collect for all of
these fees plus 1
%.
Over the last month we have been testing new software in
an effort to bring down the costs. Unfortunately, this has
also stopped our direct deposit ACH process.
We were successful in bringing the cost down somewhat.
So, effective later this week our TMSF fee of 7.95% will
change to 7.45% We will no longer charge our own .50%.
However it
will
require the distribution of manual checks for
a bit longer.
We fought for other changes that would be very positive for
drivers, like dynamic fare pricing, when customers use our
taxi app. This would allow surge pricing similar to TNCs, like
Uber and
Ly~
and drivers could make more money.
However, some drivers fought this fare flexibility and the
dynamic pricing model was voted down.
This is the first in many communications in regards to these
changes. Future communications will discuss:
Our new taxi booking app
Positive changes to our dispatch system
A new marketing team and plan to get more fares
New driver incentive plans
1
4
11
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MONTGOMERY COUNTY COUNCIL
ROCKVJL.l.E, MARYL.AND
October 23, 2015
Mr. Al Roshdieh, Acting Director
Montgomery County Department of Transportation
10 I
Monroe Street,
I
Olh
Floor
Rockville, Maryland 20850
Dear Mr. Roshdieh:
Earlier this year, the County Council passed, and the County Executive signed, Bill 53-14 to tegulate the
taxicab industry. We appreciate the work that is being done in your department to enact the new
requirements of the
Jaw-and
to that end, we wanted to make you aware of several concerns we have
regarding the recovery of costs associated with credit cards.
As enacted, Section 53-218 of Bill 53-14 contains the following provision:
A licensee must not impose on a driver or affiliate:
(1)
a charge of more than 1% over bank, merchant services and equipment provider
fees paid
by
the
licensee on
any
credit card transaction; or
(2) any other charge ofa type or amount other than those on the list adopted by
regulation under Section 53-111.
It
has been brought to our attention that Barwood Taxi company may be circumventing this section of the
law. In a memo to its drivers addressing credit card fees, Barwood st.ates
it
has reduced its "Technology
Marketing and Service Fee" (TMSF) from 7.95% to 7.45%. However, the company does not state the
actual costs of the credit card transaction. It seems unlikely that the credit card companies are charging
6.45% for their services.
Further, the fees subject to the I% limit must be "paid by the licensee on any credit card transaction."
This means that if the licensee rents or leases equipment for a set amount, it
cannot
try
to pro-rate that
cost and pass it on as a per-transaction cost for the driver. It can, however, pass that cost along to drivers
as part of the lease or as a separate fee. We are concerned that taxi companies may
be
playing
fast
and
loose with the interpretation of "any credit card transaction,'' and may be "packaging" other expenses
alongside those permitted by this provision.
STELi.A 8. WERNER
COUNCIL.
0F'FICE
6UlLCllNG '
l 00 MARYL.ANO AVENUE'. • ROCKVILLE, MARYLAND
20850
240/777·7900
• TTY 240/777-7914 • FAX 240/777·7989
WWW. MONTGOM ERYCOUNTYMO.GOV
0
PRINTED ON RE:GYCL.!0 PAl"EA
@
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Mr. Al Roshdieh
Page2
Therefore,
we would
like
you to determine what is being included in these charges-including the 7.45%
charge being passed on to drivers
by
Barwood-so that we
may
assess whether additional legislation is
needed to address or clarify this issue.
Finally,
it
is our understanding that DOT requested the adopted amendment to the Bill requiring that any
alternate card swipe device be able to accept Cal.IN Ride cards. We would like to know whether DOT
has identified any such devices that can accept Call
N
Ride.
If
not, we'd like
to
discuss the possibility of
an interim solution to expedite approval of an alternative for drivers.
We appreciate your prompt response, as these are urgent financial issues that directly impact cab drivers
across our county daily.
Sincerely,
Sidney A. Katz
Marc Eirich
George Leventhal
Roger Berliner
Tom Hucker
Nancy Navarro
Hans Riemer
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MONTGOMERY COUNTY PROFESSIONAL DRIVERS UNION
November 12, 2015
Mr. Al R. Roshdieh, Acting Director
Montgomery County Department of Transportation
Tenth Floor
I 01 Monroe Street
Rockville, MD 20850
Re:
The 2015 Reformed Montgomery County Taxicab Industry Regulations, Implementation
and, Enforcement.
Dear Mr. Roshdieh,
The Montgomery County Professional Drivers Union -MCPDU, write to:
1. Ask for clarification of some sections of the County's newly reformed and passed taxicab
industry regulations.
2. Seek explanation to some disturbing and misguided interpretations of some of the sections of
the law thus far offered by your office and Barwood Taxi Company..
On July 31, 2015, the County Executive signed the Expedited Bill 53-14 into law. While most elements
of the Bill have later effective dates, some aspects of it became immediately effective to give the fleet,
drivers and affiliates the much needed immediate relief on a faster timeline and earnestly begin the
process of mending the County's badly broken taxicab system.
On October 1, 2015, a number of the aspects of Bill 53-14 became effective. Amongst them are:
A
issues with credit card as a form of fare payment;
J..
daily lease and affiliation fees capping;
A
uniform lease agreement/contract form and;
J..
dispute resolution procedure.
Most drivers are confused with all sorts of explanation coming from your office per your letter to Ms.
Beth Levie and, from CCTI per Mr. Lee Barnes memo to Barwood drivers. We are aware that you,
and the council members, have read Mr. Barnes interpretation of the law as it pertains to his business.
We are also aware that seven of the council members feel the same way the drivers feel about his
outlandish interpretation .. The seriousness of this issue for drivers cannot be understated. We pay
thousands of dollars in credit card fees. One driver, among many who paid exorbitant fees, paid $5,000
in fees last year. Per Barwood daily rent calculation formula, $5,000 divided by 312 days would be
$16.03. When this figure is added to this driver's fixed daily rent of $111.30 on a 2010 Ford Crown
Victoria, his daily average rent would be $127.33. Could you possibly imagine what it would cost this
driver daily to operate a taxicab in Montgomery County after all other fees such as $3.00 late fee and
fuel cost are added?
Mr. Roshdieh, you are an intelligent, well-schooled and personally good-natured man but, you seem
lacking in knowledge of the facts of the industry.
It
is high time you took an honest and critical look at
the County's entire taxicab industry. This includes but not limited to the innate purpose of the industry
creation; the identified and potential needs of all the players in the industry; the financial versus public
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interests of the industry's players; the purpose and duties of the active players or executors in the
industry; the areas of success and failures of the active players; the overall health of the industry and,
most importantly, the County's residents level of satisfaction with the industry's services.
The groups of players in the industry consists of the three branches of the County Government through
their specific Departments; the County residents; the taxicab companies and the taxicab drivers. The
most active players include the DOT, the residents, the cab companies and, the drivers. With all these
interrelating bodies, the industry's problem today is well beyond the issues between the drivers and the
companies. The obvious partiality of the Executive branch and its DOT in enforcing some aspects of
the industry's regulations is the biggest single hindrance to the quality of service the drivers deliver to
the residents The drivers quest for survival urges them to do all they can do to maintain good working
relationship with the customers .but, the companies constant and senseless exploitative acts which are
often deliberately overlooked by the DOT badly inhibit the drivers efforts This favoritism seem to have
accomplished only one goal -
FAILURE TO PROVIDE EFFICIENT TAXI SERVICE TO THE
COMMUNITY.
Mr. Roshdieh, the drivers need relief and
they need it now!
We cannot wait for bureaucracy to play out
and so, we will ask you to clarify the following sections of Expedited Bill No 53-14 so we can go about
our business and actually experience the true meaning of having a process expedited:
1. 53-218: Responsibility of Licensees, Affiliates and Drivers:
A) Subsection (e)(5) states:
"not require a driver or affiliate to use fleet or association system for processing credit
card transaction ...... "
You must agree that this subsection is self-explanatory.
It
simply states that any driver or
affiliate who does not like the service fees offered by any fleet or association
DOES NOT
HAVE TO USE THE FLEET'S OR ASSOCIATION'S SYSTEM
to process credit card
transactions.
If,
however, our interpretation of this law is incorrect, please feel free to
explain to us what it is actually saying.
B) Subsection
((f)
lines 533
537) states:
" A licensee must not impose on a driver or affiliate a charge of more than 1
%
over bank, merchant
services and equipment provider fees paid by the licensee on any credit card transaction ....... "
Barwood,s interpretation of this same subsection to Barwood drivers and affiliates which was titled
"Credit Card Fees" states:
"Barwood's Technology Marketing and Service Fee (TMSF) covers all equipment provider costs,
such
as
bank merchant fees, credit card charge-back fees, transaction fees and air time fees, plus all
fees for Call N Ride processing. Per Chapter 53-218, we are allowed to collect for all of these fees
plus 1%"
We all do in fact understand that Barwood is a legitimate private business entity which has the right to
charge whatever it chooses. We all also do understand that the drivers and affiliates are legitimate
private business persons and/or entities who have the right to choose what they believe is best for their
businesses.
Barwood may have invested millions of dollars into its business and hopes to make substantial profit to
be comfortable with its operation. By the same token, the drivers and affiliates invested hundreds and
thousands of dollars and likewise hope to make adequate profit to sustain their businesses. Since none
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of the parties invested to lose, the question becomes, 'how must one invest to insure a good and steady
rate of return without tilting the balance?' In a market full of sellers and buyers of similar items, one
logical answer to this question would be to invest wisely so to minimize pitfalls. Another logical
answer would be for the buyers to purchase the lowest priced and equally effective item that would
serve the investment purpose.
Now, back to the true meaning of 53-218. The first two lines (533 and 534)- per Councilmember
Sidney Katz's amendment of7/21/15 at 2:16pm clock time states, "A licensee
MUST NOT IMPOSE
on a driver or affiliate a charge of more than 1% over bank .... "
Barwood's Credit Card Fee declaration states, "Barwood's Technology and Service Fee (TMSF)
covers all equipment provider costs ..... " This is way more than necessary to provide this service.
The drivers and affiliates found a cheaper way to provide the same service to their customers. This
enables them to better manage their business, make ends meet and possibly make marginal profit.
For Barwood to tell the affiliates and drivers that using their individual devices to perform credit card
transactions is a violation of Chapter 53 is unfounded and irresponsible. Barwood
MUST BE
RESTRAINED
from using falsified interpretations of the County code as a shield to protect the
owner's bad business decisions.
2.
53-313: Passenger Receipts; Credit Card Transactions:
Mr. Roshdieh, to say that we are disappointed in you and your response letter of October 15, 2015
addressed to Mrs. Beth Levie in regard to the use of individual credit card processing device by drivers
and affiliates would be a gross understatement. You are supposed to be the custodian and the enforcer
of the law and, you are supposed to be fair to all and trusted by all. How could you write such a biased
letter that reads so much like something out of Mr. Lee Barnes own office?' Do you really think so little
of drivers that we cannot be responsible charging customers on devices that are used in all sectors of
the economy?
It
is very unfortunate you chose at this time to narrowly interpret the new reforms.
Nevertheless, as far as this section which formed the base of both of your letter and that of Mr. Barnes
to the drivers and affiliates goes, we offer the following. For ease of reference, we quote this same
section 53-313:
"(a) A driver must give each passenger a receipt showing the name of the fleet or association, the
time and place of origin and destination of each trip, and the amount of the fare, on a form
authorized by the Department, unless the passenger declines to receive the receipt.
(b) Any system or service used to process credit card transaction must:
1.
be compliant with all applicable tax laws
2. accept payment through any County user-side subsidy; and
3. be approved by the Director".
Mr.
Roshdieh, 53-313 clearly relates to fleets' and/or associations' existing and already approved
operating systems. As indicated by these statements:
"A driver must give each passenger
a receipt showing the name of the fleet or association
on a form
authorized by the Department. ... " and
"Any system or service
used to process credit card transaction must accept payment through any
County user-side subsidy program ..... "
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The fact that drivers are required in this section to give receipts to passengers who may need to have
receipts is simply because:
1. the drivers are the closest "representatives" of the fleet or association to the passengers;
2. the drivers are the ones who provided the actual service to the passengers and;
3. the drivers are capable of operating the fleet's or association's on-board system that is equipped
to produce the approved form of receipt.
If
the phrase, "A driver" were removed from this section, it would become much clearer that the section
is addressing the responsibilities of a fleet or association. When the drivers owned and operated
cooperative is up and running, this section would then apply to us as a fleet. All that we ask for at this
time is to be able to freely exercise our rights by using our individual and lawful devices to process
regular credit cards while we continue trying to provide better service to the customers.
As for the user-side subsidy (Call
N
Ride), we have the following to propose:
1. In order
tq
accommodate all riders, we propose to use the fleet on-board system to service the
program and then pay 1% processing fee on each transaction to the fleet, or
2. That the Department makes arrangement to award each driver the contract to individually
service the program as an entity. This would then enable the DOT to inspect and approve each
contractor's device or system or service according to regulations, or
· 3. That the Department exempts drivers from servicing the program since (as in the case of
Orange Taxi Company which had been exempted from the same because it has less than 29
vehicles in its fleet) no driver has enough number of vehicles to be considered a fleet.
Reduced Taxicab Insurance Requirement:
The next big, or even bigger, issue on our (drivers) minds is to find out exactly when the reformed
insurance requirement of 50/100/25 became effective. The reduction of insurance requirement to the
level ofTNCs State requirement, we understood, is to even the playing field across the board with
TNCs. This means that the fleet and private owners would get to pay less monthly premium on the
vehicles insurance coverage. This also means that the drivers would get to pay reduced daily premium
on the vehicles they drive which,as a result, would immediately reduce the daily lease on the vehicles.
Mr. Roshdieh, why is
Mr.
Lee Barnes telling drivers that the Department is responsible for the
companies uphold of the current lease rates because of its delay in setting the lease cap? We know that
lease cap setting has nothing to do with the immediate realization of cost savings prompted by the
insurance requirement reduction. We demand immediate enforcement of this law..
Immediate Relief Needed
Mr. Roshdieh, we, the drivers and private owners who are lawfully licensed by Montgomery
County to do business in the County as law abiding citizens and entrepreneurs have decided to
STOP
being pushed around by the fleet owners whom your office is aiding by its inaccurate interpretation of
the law. We have therefore resolved to take the following actions, and more as the need may be, until
all of our concerns are thoroughly, rightfully and, conclusively addressed:
1.
Per 53-218 (e)(5) -
"not require a driver or affiliate to use the fleet or association system
for processing credit card transactions ....."
Effective immediately:
0
We will stop providing service to credit card customers through the fleet or association
system.
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0
We can
ONLY
process credit card transactions through our individual devices unless the
fleet or association can beat or match the processing fees charged by our merchant and
equipment provider and/or the bank.
2
Per 53-224 -
"Insurance required"
provision:
J...
On October 1, 2015, the reformed minimum vehicle insurance coverage became
effective. According to Amalgamated Casualty Insurance Company estimate on
reformed minimum coverage of 50/100/25 (which, by the way, was requested by
CCTI),
the fleet's monthly premium for leased vehicles is $208.00 or $6.93/day.
Up
until date (over 42 days since this requirement became effective)
leasing drivers are
still paying a monthly premium of $609. 70 or $23.45/day.
Since this piece of legislation was primarily passed to relief the fleet and the drivers
from the burden of high insurance costs we demand:
1. that you use your authority under the law to call for reduced rates
immediately;
2. that our reduced premium be made effective from October 1, 2015 and/or;
3. according to Mr. Barnes driver contract term regarding vehicle insurance
which states,
"Lessee agrees to purchase and maintain at all times a public liability
insurance policy in such amounts as may be required by law, naming Lessor as an
additional insured, and to provide proof of such coverage upon request'',
we demand
the option to so choose.
3
Any Act or sign of retaliation against any driver or affiliate by the fleet or association:
Please be advised that
ANY
act or sign of retaliation against any driver or affiliate by the fleet
or association for demanding equitable measures to regain his or her rights will be met with
drastic actions against the fleet or association by the Union. We have for long been trying to
remain reasonable and accommodating but it has now became obvious that the fleet owners
have always taken our spirit of tolerance for weakness. We will no longer neither tolerate the
fleets inconsiderate acts and slaving mentality nor pretend to the customers as though
everything is well with us and the business. These types of fleet owners behavior caused this
County the serious shortage of experienced taxi drivers that we all are now experiencing. We
now say that it is
ENOUGH.
We want to concentrate on providing adequate and professional
taxi service to the well deserving residents and visitors of Montgomery County.
4
Our immediate course of action:
J...
We will henceforth begin using our individual credit card processing device to
process ONLY credit and debit cards. The passengers will be provided with
receipts that will protect the fleet or association from any claim that may arise
from any processing transaction.
J...
We will expect that all of the elements of the taxi reform are effective and shall
accordingly encourage drivers to utilize all of their rights.
J...
Because we sincerely appreciate our customers, we wouldn't want to play a part
in further disruption of the already fragile transportation system in the County.
However, we shall reserve the right to take some serious actions if the drivers and
affiliates situations do not immediately improve significantly.
J...
We will no longer be ignored. We, just like you, Mr Roshdeih, and the fleet owners
have families to raise. We need every single penny we earn
to
do
so.
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We thank you very much for reading through this letter and hope that you do now understand our
plight. We do not mean to cause harm or, be disrespectful to anyone but we must do what we must to
feed our families. We thank you in advance for your cooperation and expediency in resolving these
matters to everyone's satisfaction.
Yours truly,
Peter Ibik, President, MCPDU
Copies forwarded to:
Mr. Isiah Leggett, County Executive
Mr. Sidney A. Katz, Councilmember
Mr. Marc Eirich, Councilmember
Mr. George Leventhal, President, County Council
Mr. Roger Berliner, Chairman, T &E Committee
Mr.
Tom Hucker, Councilmember
Mrs. Nancy Navarro, Councilmember
Mr. Hans Riemer, Councilmember
Mr. Reza Raoofi - Action Taxi
Mr. Lee Barnes Barwood Taxi
Mr.
Robert Alexander - Orange Taxi
Mr. David Mohabbi - Regency Taxi
Mr. Dewght Kines - Sun Taxi
Mr. Christian Sweeney:.__ AFL/CIO
Ms. Beth Levie - AFL/CIO
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Isiah
Leggett
County Executive
Marc P. Hansen
OFFICE OF THE COUNTY ATTORNEY
MEMORANDUM
County Attorney
TO:
Al Roshdieh, Director
Department of Transportation
Edward B. Lattner, Chief
Division of Government Operatik
Robert
J.
Birenbaum
(S
Associate County Attorney
January 5, 2016
VIA:
FROM:
£/3>/--
£f
DATE:
RE:
Bill Review of Bill
No.
53-15E
Background
This past summer, the County enacted significant amendments to Chapter 53 of the
County Code (the "Taxicab Code") that overhauled the County's regulation of the taxicab
industry. Unlike this past summer's sweeping reforms to the Taxicab Code, Expedited Bill No.
53-15 (the "Bill") has a narrow focus that relates to credit card transactions and the requirements
of the device that processes those transactions.
Taxicab passengers :inay pay their fare in cash or with a credit card. Unlike with cash,
when a passenger uses a credit card, the driver receives his remuneration for the fare from the
taxicab company.
As
such, the driver has been entirely dependent upon the taxicab company for
reimbursement for the fare when processed through the taxicab company's credit card machine.
Credit card companies impose fees upon the taxicab companies for credit card transactions.
In
consequence thereof, the taxicab companies pass those charges onto drivers when reimbursing
the drivers. However, current law also allows the taxicab companies to impose upon the drivers
an additional charge of up to 1%
above
the costs for processing credit card transactions. That
means that
if
the credit card company charges a fee of3% of the fare for processing a credit card
transaction, the taxicab company may impose upon the drivers a charge of up to 4%. The
imposition of charges in excess of costs
has
caused great acrimony within the taxicab industry.
101 Monroe Street, Rockville, Maryland 20850-2540
(240) 777-6700 • TTD (240) 777-2545 •FAX (240) 777-6705
@
I
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Al Roshdie
January 5, 2016
Page 2
Discussion
Expedited Bill 53-15 amends§ 53-218(f) of the County Code to preclude taxicab
companies from imposing upon drivers any charges in excess of the fees borne by the taxicab
companies
in
processing credit card transactions. This part of the law is clear. However, the law
should be strengthened to mandate taxicab companies to provide the Department of
Transportation their fee arrangement with various credit card companies in processing credit card
transactions on a regularly scheduled basis. Currently, there may not be sufficient authority
in
the Taxicab Code to mandate and compel taxicab companies to provide such information to the
Department of Transportation, nor are there any regulations addressing this topic. The
Department of Transportation needs the ability to verify the fee agreements that credit card
companies have with taxicab companies
in
order to investigate complaints by drivers who claim
that they are being overcharged. Without such clearly defined authority, the Department of
Transportation may not be able to effectively police taxicab companies for compliance with the
County Code.
A policy matter: Expedited Bill No. 53-15 also amends§ 53-313 of the County Code.
Under current law, every system used in a taxicab to process credit card transactions must also
be able to process payments for the County's "Call-n-Ride" program. The Call-n-Ride program
offers subsidies to low-income persons who are elderly or have disabilities and need
transportation for medical appointments.
1
The Call-n-Ride subsidy is processed electronically
through the credit card reader. The Bill proposes to eliminate the requirement that every system
used to process credit cards have the ability
to
process Call-n-Ride subsidies. This amendment
may have serious implications for the Call-n-Ride program because not every credit card reader
has the ability to process Call-n-Ride payments. The Call-n-Ride program only processes
subsidy payments through electronic means because the previous paper-voucher system was
susceptible to abuse and fraud.
If
the County wishes to avoid disruptions
in
service to those who
are eligible for the Call-n.:Ride program, the Bill should be amended to require that a system be
in place to process Call-n-Ride payments.
cc:
Marc P..flansen, County Attorney
Bonnie Kirkland, Assistant CAO
Josh Hamlin, Legislative Attorney
15-007567
OCA bill review
1
http://www.montgomerycountymd.gov/dot-transit/seniors.html
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COMCOR- Code of Montgomery County Regulations
COMCOR 53.223.01 Taxicab Participation in User-Side Subsidy Programs
53.223.01.01 Background Information
Montgomery County Code Section 53-223 requires that a regulation be established to define
participation by taxicab fleets or associations in the County's user-side subsidy programs.
53.223.01.02 Participation Requirements
1.
Taxicab fleets or associations that hold 30 or more taxicab Passenger Vehicle
Licenses (PVLs) must participate in the County's user-side subsidy programs.
2.
Taxicab fleets or associations that have 29 or fewer Passenger Vehicle Licenses
(PVLs) are encouraged to participate in the County's user-side subsidy programs but are not
required to participate.
53.223.01.03 Effective Date
This regulation becomes effective when the Council adopts a resolution approving the regulation
or on a later date specified
in
the regulation.
If
the Council takes no action of approval or
disapproval, the regulation becomes automatically effective 61 days after the Council received it,
or on any later deadline set by regulation.
(Administrative History: Reg. No. 21-07 (Method 2); Orig. Dept.: Public Works and
Transportation)
American Legal Publishing Corp.
1
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T&E Item2
February 4, 2016
Worksession
ADDENDUM
MEMORANDUM
TO:
FROM:
SUBJECT:
Transportation, Infrastructure, Energy and Environment Committee
Josh Hamlin, Legislative
Worksession
Transactions
Attorne~
Addendum:
Ex~lit~d\)
Bill
53-15, Taxicabs - Credit Card
Additional Materials for Committee Consideration
Attached to this memorandum are three items that may be helpful to the Committee in
considering the issues for discussion in the February 4, 2016 worksession. The first is a response
from DOT Director Al Roshdieh to the October 23, 2015 letter from seven Councilmembers that
is included in the packet. Also, Council staff received two additional items late on February 3:
(1)
a chart to illustrate Barwood's credit card processing costs; and (2) a letter from Cornerstone
Montgomery expressing concern about possible impacts ofBill 53-15.
DOT's response to Councilmembers' letter
As discussed in the packet, seven Councilmembers signed a letter to then Acting DOT
Director
1
Al Roshdieh, expressing concern about the amount of the charge and inquiring about the
Department's progress in identifying alternative credit card processing systems that could accept
payment through the County's user-side subsidy program. In his January 15, 2016 response, Mr.
Roshdieh indicated that he "was unable to obtain sufficient detailed information from the fleets in
order to develop a specific breakdown of the percentages paid by the fleets to credit card
companies."
Mr.
Roshdieh also indicated that DOT has not been able to identify any other credit
card processing devices capable of accepting payment through the County's Call-n-Ride program.
Chart illustrating Barwood's costs for processing credit card transactions
As mentioned above, Council staff received, at 11 :25 p.m. on February 3, a chart from
Barwood that illustrates the company's costs to process credit card transactions. Staff has not had
sufficient time to fully analyze the chart, but it appears that at least some of the charges shown are
not incurred on a per-transaction basis.
Mr.
Barnes will be at the worksession to answer questions
on this document from Committee members.
Letter from Cornerstone Montgomery
Also at 11 :25 p.m. on February 3, staff received a letter from Cornerstone Montgomery
expressing concern that Bill 53-15's provisions allowing drivers to select their own credit card
processing devices, subject to approval by DOT, will negatively impact the recently expanded
1
Mr. Roshdieh was confirmed as DOT Director on January 26, 2016.
 PDF to HTML - Convert PDF files to HTML files
'Road to Independence' program. As with the Barwood chart discussed above, staff has not had
adequate time to consider the concerns expressed in the letter, but notes. that this concern, if valid,
would also be valid under the law
as it currently exists.
The law already allows drivers to use their
own processing devices, but requires that they be capable of accepting Call-n-Ride payments. Bill
53-15 merely shifts the Call-n-Ride requirement from the system to the vehicle. Also, it is not
clear from the letter exactly why the use of a different processing system would prevent tracking
transactions, or why the payment couldn't be made through the device/system that will still have
to be in each taxicab to accept Call-n-Ride payments.
This packet contains:
DOT response to October 23 letter, January 15, 2016
Barwood credit card costs chart
Letter from Cornerstone Montgomery, February 3, 2016
Circle#
1
2
3
F:\LAW\BILLS\1553 Taxicabs Credit Card Transactions\TE Memo 02042016 ADDENDUM.Docx
2
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DEPARTMENT OF TRANSPORTATION
Isiah
Leggett
County Executive
MEMORANDUM
Al
R.
Roshdieh
Acting Director
January 15, 2016
TO:
Sidney Katz, Councilmember
Marc Eirich, Councilmember
Roger Berliner, Councilmember
Tom Hucker, Councilmember
Nancy Navarro, Councilmember
Hans Riemer, Councilmember
Al
R.
Roshdieh,
Actin~rl.¢j~7,
Department of
Tr~filiJiitBi'I~_,.,,.
Taxicab Credit Card Cost Recovery
FROM:
SUBJECT:
I am writing in response to your October 23, 2015 letter, in which you asked me
to look into the fees paid by the taxicab companies for processing credit card transactions, and
what is included in those fees. I apologize for the delay in responding to your inquiry.
I was unable to obtain sufficient detailed information from the fleets in order to
develop a specific breakdown of the percentages paid by the fleets to credit card companies.
Most of the fleets simply responded
that
they either charge no additional fee to the driver, or only
1
%
additional. Barwood's response stated that "there are a multitude of components that go into
what a company is charged for various 'merchant services' so the fee is not a
flat
x.x%" and" ...
the fees are composed of and vary as follows: Transaction Fees, Basis Point Fees, Verifone Fees,
Airtime Fees, store/forward floor fees, and Web services fees." Harwood additionally stated
· their costs are " ... based on an average trip for credit cards" and "Verifone including Transaction
Feed Equipment fees Airtime
&
web portal fees 6.45%".
In
regards to your question about other devices accepting Call-N-Ride, we have
not yet been able to identify any such device. My staff is continuing to look for potential
solutions.
If
you have any further questions, please feel free
to
contact me or my Chief of
Management Services, Anthony Alexiou at 240-777-7198 or by email at
Anthony.alexiou@montgomerycountymd.gov.
Office of the Director
101 Monroe Street, 10th Floor • Rockville, Maryland 20850 • 240-777-7170 • 240-777-7178 FAX
www.montgomerycountymd.gov/dot
~
. .
~
. . . . . . , .Ciilt
._ .
~
""1-251...50 TTY
:::"--:;./""'·::i
(j)
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2014 Credit Card Processing Costs Passed on to
Drivers
as
0
/o
of Total Credit Card Revenue
9
10
11
8
0.22% 0.01%
0.03%
0.01
"lo -
-, ,:.:.;.:----
2
\
-
I
2014 Vendor Credit Card Processing Charges Passed on to Drivers
1
VeriFone Transaction Fees
(#of transactions *fee)
VeriFone Basis Points per Transaction
(total credit card revenue
*fee)
VeriFone Processing Fee for Visa, MasterCard, Discovery
(revenue
*fee)
American Express Processing Fee
(revenue *fee)
VeriFone/Verizon Airtime Fee
(#of cars
*fee)
Web Service and Credit Card Gateway VPN
Vendor Fees
Charged to
Barwood
$ 0.25
0.15%
2.85%
4.33%
$ 25.00
$650.00
$
$
1.50
0.75
3.35%
'
Shown in Pie Chart:
Annual Credit Card
Fees as % of 2014
Credit Card Revenue
I
I
0.94%
0.14%
1.95%
1.08%
1.18%
0.07%
2.16%
0.01%
0.22%
0.01%
0.03%
7.77%
I
2
3
4
I
5
6
7
(monthly flat fee)
VeriFone call-N-Ride Transaction Fees - Preauthorization
&
Sales
(#of swipes *fee
-
County requires an additional card
swipe
before trip starts)
Gift Card Per Transaction Fees
(number of gift cards used* fee)
Credit Card Account Billing for Executive
and
Institution Accounts
8
9
10
(revenue *fee)
Charge Anywhere Monthly Fee
(applies to a passenger fare paid by another party)
IRN Fee for
account
reconciliation
(monthly fee)
TOTAL 2014 CREDIT CARD PROCESSING FEES PASSED ON TO DRIVERS AS%
OF CREDIT CARD REVENUE
I
$140.00
$ 24.00
1
1
11
Barwood
Taxi February 3,
2016
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Cornerstone
Montgomery
February 3, 2016
Dear Council President Floreen,
I am writing to you today on behalf of Cornerstone Montgomery and our partners to express concern about Expedited
Bill 53-15, Credit Card Transactions. We are concerned that this legislation will negatively impact our recently expanded
'Road to Independence' transportation assistance program.
The Road to Independence initiative began as a public private partnership between our organization, The Rotary Club of
North Bethesda and Barwood Taxi. This program provides taxi service to disabled individuals in Montgomery County to
places of employment at hours when and in locations where public transportation systems are not operating.
A key component of the program is our partnership with Barwood Taxi. Our program participants receive a reloadable
Barwood travel vouchers with a fixed dollar amount to cover their transportation costs. The gift cards are swiped
through the payment terminals just like a credit card. Using the secure payment terminal is essential as it allows us to
keep track of each transaction and generate the reports necessary to audit the success of our efforts.
Cornerstone Montgomery recently received a grant from the Montgomery County Council that is helping to expand our
funding base and allow us to serve more individuals with disabilities through partnerships with the following charities:
Luke's Wings, Peer Wellness and Recovery Services, Inc., Family Services, The Treatment and Learning Center, Easter
Seals and Interfaith Works.
Bill 53-15 proposes to amend the requirements for credit processing systems, allowing drivers to use a system oftheir
choosing. Our concern is that this will inhibit use of the travel vouchers we rely on as well as our ability to access what is
now a new County supported program. We will be unable to track the transactions of our program participants and we
will lose the data needed to evaluate the program.
The grant we received demonstrates that the Council recognizes the need for unique transportation assistance programs
like ours. There is a need in the County for subsidized transportation assistance and our program brings togetherthe
business and nonprofit sectors ofthe County to address that need. It would be unfortunate to jeopardize a valuable
community initiative in its infancy.
We urge the Council to weigh the potential unintended consequences of Bill 53-15. Limiting the ability of taxicab
companies to process County subsidized trips would jeopardize the operations of our program and any future efforts to
attract additional partners.
Sincerely,
u~.~~o~
Cari Guthrie Cho, LCSW-C
President
&
CEO
6040 Southport Drive
I
Bethesda, MD 20814
I
www.cotnerstotiemontgomery.org
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T&Eitem2
February 4, 2016
Worksession
MEMORANDUM
February 2, 2016
TO:
FROM:
SUBJECT:
Transportation, Infrastructure, Enejl7
~~onment
Committee
Josh Hamlin, Legislative
Attome~
_.
Worksession:
Expedited Bill 53-15, Taxicabs
Credit Card Transactions
Expedited Bill 53-15, Taxicabs - Credit Card Transactions, sponsored by Lead Sponsors
Councilmembers Eirich, Riemer and Navarro, was introduced on December 8, 2015. A public
hearing was held on January 19.
Bill 53-15 would:
(1)
limit the amount a licensee may charge a driver or affiliate for processing a
credit card transaction;
(2)
amend the requirements for credit card processing systems in taxicabs; and
(3)
generally amend County law concerning taxicabs.
Expedited Bill 53-15 would refine existing provisions of the law related to processing
credit card payments for taxicab service. These provisions were added to the law by Expedited
Bill 53-14, which was enacted earlier this year and substantially revised Chapter 53. Specifically,
the Bill will prohibit licensees from charging drivers and affiliates more than the actual cost to the
licensee for processing a credit card transaction, and will make it easier for drivers to use their own
credit card processing systems.
Background
The County's taxicab law was substantially revised in 2015 by Expedited Bill 53-14. That
Bill made a number of changes aimed at improving conditions for drivers and allowing the taxicab
industry to better compete with transportation network companies such as Uber and Lyft.
Expedited Bill 53-14 established a Taxicab Services Commission to evaluate the economic
condition of the taxicab industry and the adequacy of service rendered by the industry. The Bill
also made a number of changes to the requirements of taxicab leases and operating agreements,
including requiring the County Executive to establish standardized lease/affiliation agreements,
maximum lease and affiliation rates and permissible ancillary fees that may be charged to drivers.
The Bill also provided for the issuance of new passenger vehicle licenses to increase the number
of accessible taxicabs on the road.
Among the driver protection provisions included in Bill 53-14 were changes to the law
aimed at
(1)
limiting the premium that fleets could pass along to drivers for processing credit card
transactions and; (2) making it easier for drivers to choose their own credit card processing
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mechanism. Under the law as amended Bill 53-14, a fleet or association may not charge a driver
more than "1
%
over bank, merchant services and equipment provider fees paid by the licensee on
any credit card transaction." ·Also, the law now allows drivers to use their own credit card
processing systems, provided the systems: ( 1) are compliant with all applicable tax laws; (2) accept
payment through any County user-side subsidy program ("Call-n-Ride"); and (3) are approved
by the Director of the Department of Transportation (DOT).
It
is these provisions that this Bill
proposes to modify. This Bill would provide that fleets and associations may only charge drivers
the amount paid by the fleets for processing credit card transactions (effectively changing the "1
%"
to "0%" in the existing law) and would remove the requirement that
all
credit card processing
systems accept Call-n-Ride payments.
Public Hearing
A public hearing was held on January 19, at which there were four speakers. Acting DOT
Director Al Roshdieh testified on behalf of the County Executive, stating that the Executive "does
not object to this bill," but expressing concerns for possible unintended consequences (see ©8).
To address these concerns, he requested two amendments to the Bill, which will be discussed
below. Lee Barnes ofBarwood Transportation testified in opposition to the Bill, raising questions
about the definition of "processing" and pointing out that fleets incur more costs on credit card
transactions than just the fee charged by a financial institution. Mr. Barnes also expressed concerns
that the amendments proposed in Bill 53-15 would result in taxicabs having no way to process
Call-N-Ride
1
transactions, and would call into question the purpose of the Taxicab Commission
created by Bill 53-14 (see ©9-10).
Beth Levie of the AFL-CIO spoke in support of the Bill, providing hypothetical examples
of the impact of credit card processing charges imposed by fleets on driver income (see ©11-12).
2
Peter Ibik, President of the Montgomery County Professional Drivers' Union, also spoke in
support of the Bill, echoing Ms. Levie's statements, and pointing out that, when using fleet credit
card processing systems, drivers do not get paid immediately for credit card transactions, as they
do for cash payments. Mr. Ibik noted that this delay in payment to drivers presents an impairment
to the drivers' ability to make their daily rent payments, and that allowing drivers to use their own
processing systems would remove this impairment.
Issues for Committee Discussion
.1.
Should the allowed premium on credit card transactions be eliminated?
Expedited Bill 53-14, as referred to the Council by the T&E Committee favorably (2-1),
would have capped the amount that a fleet could charge a driver for credit card processing at 5%
of the transaction. This cap was requested by a group of drivers as part of a post-mediation position
statement, and is similar to the 5% cap imposed by the City of Alexandria (see ©14). Before
passage, however, the Bill was amended by the full Council to limit the amount of premium over
costs that a fleet could charge a driver, rather than set a hard 5% cap on the charge. In moving the
Call-N-Ride is the County's "user-side subsidy program, which assists ... Participation
in
County user-side subsidy
programs in mandated by
§
53-222, which provides, in its entirety: "Any fleet or association must participate
in
the
County's user-side subsidy programs, as required by applicable regulations."
2
Barwood provided a counterpoint to Ms. Levie's examples, which indicates that fleet-wide, 43% of fares are
collected by credit card transaction (see ©13).
1
2
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amendment, Councilmember Katz expressed a view that 5% might actually be too high, given his
understanding of processing charges for credit card transactions. As enacted, Bill 5 3-14 limited
the amount a fleet or association could charge a driver to "1
%
over bank, merchant services and
equipment provider fees paid by the licensee on any credit card transaction."
In October 2015, after this change went into effect, Barwood sent a message to drivers
informing them of the new law and, among other things, describing how Barwood would charge
credit card fees to drivers in light of the changes in the law (see ©15-16). Barwood's message
said that credit card fees would be charged as the "Technology Marketing and Service Fee"
(TMSF), which includes "all equipment provider costs, such as bank merchant fees, credit card
charge-back fees, transaction fees and air time fees, plus all fees for Call-n-Ride processing." In
accordance with the law which allowed them to recover their costs plus 1%, Barwood informed
drivers that the TMSF fee would be 7.45%.
In response to Barwood's message, seven members of the Council sent a letter to Acting
DOT Director Al Roshdieh, expressing concern about the amount of the charge and inquiring about .
the Department's progress in identifying alternative credit card processing systems that could
accept payment through the County's user-side subsidy program (see© 17-18).
3
The Montgomery
County Professional Drivers' Union also weighed in, with a letter to Acting Director Roshdieh
questioning the legitimacy of the amount of the TMSF and the restrictions on drivers' use of their
own credit card processing systems (see ©19-24).
As mentioned above, this Bill would effectively reduce the 1% premium over costs
currently allowed to 0%, providing that "a licensee must not impose on a driver or affiliate a charge
of more than the fees paid by the licensee for processing any credit card transaction ... " At the
public hearing, Acting Director Roshdieh said that DOT currently does not have the ability to
verify that companies are in compliance with the law, and requested an amendment to require the
fleets to certify to the Director that they are complying with the law.
4
Staff agrees that such an
amendment would strengthen the law, but still questions whether the certification would be
effective in ensuring compliance.
In addition to the concerns stated by Acting Director Roshdieh, Lee Barnes expressed
concern over the term "processing," pointing out that "the fee charged by a financial institution is
just one of the many costs taxicab companies incur when customers pay by credit card." Mr.
Bames's concern about the possible ambiguity in the use of the word processing, although the Bill
could be amended to simply remove the "l
%
over" from the existing law, accommodating the
other charges that
Mr.
Barnes alluded to, but eliminating any premium collected by the fleet.
5
Council staff believes that the Committee made a well-founded recommendation when it
considered Expedited Bill 53-14, and recommends a return to that position. Amending the Bill to
prohibit a licensee from imposing on a driver or affiliate charges totaling more than 5% of a credit
card transaction would provide drivers with relief that staff believes was intended by the enactment
of Bill 53-14, while providing clarity and ease of administration.
3
The memorandu111 was signed by Councilmembers Katz, Eirich, Leventhal, Berliner, Hucker, Navarro, and Riemer.
This amendment was also suggested by Associate County Attorney Robert J. Birenbaum in his memorandum to
Acting Director Roshdieh, dated January
5,
2016 (see ©25-26).
5
It
is worth noting that, if the Bill is enacted to simply remove this premium, Barwood drivers will still be paying
6.45%, significantly more than the
5%
cap recommended by the Committee in its consideration of Bill 53-14.
4
3
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Staff recommendation:
Amend lines 4-8 of the Bill as follows:
(f)
A licensee must not impose on a driver or affiliate:
(1)
[[a charge of]] charges totaling more than [1
%
over bank,
merchant services and equipment provider] [[the fees paid
by the licensee [on] for processing any credit card
transaction]] 5% of any credit card transaction; or
2.
Should the reguirement that all credit card processing systems accept payment through
County user-side subsidy programs be removed?
Expedited Bill 53-14 added the existing language, which allows drivers to use their own
credit card processing systems,
6
provided the systems:
(1)
are compliant with all applicable tax
laws; (2) accept payment through Call-n-Ride; and (3) are approved by the Director of DOT.
During Committee worksessions, DOT requested language requiring that any system accept Call-
n-Ride payments. This requirement has had the unintended effect of prohibiting drivers from using
their own processing systems, as commonly used personal systems such as Square
7
are not
currently capable of accepting these payments. Drivers say the ability to use such systems is
important for two reasons: (1) to reduce their cost of processing the transactions
8 ;
and (2) to
eliminate the lag time between the transaction and the time the driver receives payment.
9
The Bill,
as introduced, simply removes the requirement that credit card processing systems accept Call-n-
Ride, but does not change the requirements of § 53-222 that "[a]ny fleet or association must
participate in the County's user-side subsidy programs,
as required by applicable regulations."
(emphasis supplied)
Both DOT and Lee Barnes of Barwood expressed concern at the public hearing that the
Bill as introduced could have the unintended effect of reducing the number of taxicabs capable of
accepting Call-n-Ride payments.
10
DOT has requested that language be added to the Bill to
expressly require that all taxicabs licensed to or affiliated with fleets and associations subject to
the participation requirements of§ 53-222 be able to accept Call-n-Ride payments. Council staff
believes that, given the language in § 53-222, the Executive could impose the requirement that
For a brief discussion of why drivers may wish to use their own processing system, such as Square, and the legal
status of its use in some jurisdictions, see http://www.geekwire.com/2014/taxi-drivers-seattle-allowing-customers-
pay-square/
7
Square is marketing its service specifically to Taxicab drivers: see https://squareup.com/taxi-credit-card-processing
8
Square currently charges 2.75% per transaction.
9
Square provides an "instant deposit" that virtually eliminates any lag: https://squareup.com/pos/pavments/instant-
deposit
10
According to DOT, Call-n-Ride has 5,400 participants, of whom approximately 75% are age 67 and over. The
remaining participants are persons with disabilities between the ages of 18 and 66. The Call-n-Ride program provides
roughly 10,500 trips per month, for which participating fleets are reimbursed, in aggregate, about $200,000 per month.
Fleets required to participate in the program are Earwood, Regency, Action, and Sun.
6
4
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taxicabs be equipped to accept Call-n-Ride payments by regulation.
11
However, given the
importance of protecting Call-n-Ride participants' access to transportation, staff agrees that it is
appropriate to include the requirement in the law.
Adding this requirement (which, as a practical matter, already exists through§ 53-222 and
the regulations, while facilitating drivers' ability to process their own credit card transactions may
disrupt the business arrangements currently in place between some fleets and their processing
services. Mr. Barnes indicated that Barwood's provider, Verifone, would remove their equipment
if it was only used to process Call-n-Ride transactions. Verifone would do this, according to Mr.
Barnes, because the provider has an expectation that the equipment will generate significant
revenue from credit card transactions, and makes it profit from .those transactions.
If
drivers begin using their own processing systems to process credit card transactions, this
sort of relationship would likely have to evolve to a subscription system where the provider is
compensated directly by the fleet or association. The fleet or association would then pass that cost
on to the driver in the lease, or as an additional charge approved by the Director. Mr. Ibik, in his
letter to Acting Director Roshdieh, proposed that drivers would pay the cost of the equipment
through a payment of 1% per transaction paid to the fleet. This proposal is problematic in that it
would still require the fleet to assume the risk that such payments may not cover the cost of the
equipment, leaving the fleet to cover any shortfall. Another alternative may be for the County to
identify and contract with a provider, and include the cost of the equipment in the annual fee
required for the PVL or, possibly, the Driver Identification Card. In any event, this shift will
almost certainly result in an increase in upfront expenses for drivers to cover the costs where such
a new arrangement is required.
One additional concern expressed by Mr. Barnes should also be considered. When a driver
uses his or her own credit card processing system, and a customer has a problem with the
transaction, that customer will likely contact the fleet. The fleet, which in these circumstances
would have no control over the payment, would not be able to directly assist the customer in
resolving the conflict, beyond referring the customer to the driver or attempting to mediate the
dispute. A fleet could also direct the customer to initiate a payment dispute with the customer's
credit card, which would then trigger (at least in Square's case) an existing dispute resolution
procedure.
12
However, a shift to drivers using their own credit card processing systems could
increase customer service costs for the fleet, and it would likely be the fleet that a customer would
hold at least partially responsible for the wholly independent actions of its drivers.
As mentioned above, DOT has requested that the requirement that each taxicab be
equipped to accept Call-n-Ride payments be clearly addressed in the law. Council staff believes
that such an amendment would preserve the ability ofCall-n-Ride participants to obtain necessary
transportation. While it is still unclear what the cost of requiring compliance while decoupling
credit card transactions from Call-n-Ride would be, such cost should be borne by each driver as
an independent contractor. With this consideration in mind, staff recommends Committee
approval of the Bill with the following amendment.
Staff recommendation:
Add the following language immediately after line 10:
Existing regulations for participation in County user-side subsidy programs are at COMCOR 53.223.01 through 03
(see ©27).
12
11
hlt!?.~.;/Lf?.9J!.m:~.!:JD..&9.m/J.1~J12/J1.§[9.D/.m:t!f..!9.0.§.~_2:!:~.§Q.!.Y.!!!g,:P..!l)'.!n~!}l:QiS.PJI1~.§
5
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53-222. User-side subsidy programs - participation.
.UU
.(!;U
Any fleet or association must participate m the County's user-side subsidy
programs, as required by applicable
regulations~
and
each taxicab affiliated with, or operating under
f!
license issued
:ill..
.§:
fleet or
association that is required to participate in
~
County's user-side subsidy program
must be equipped to accept payment through the program.
*
*
*
This packet contains:
Expedited Bill 53-15
Legislative Request Report
Fiscal and Economic Impact Statement
Public Hearing Testimony
Af
~M~
Lee Barnes
Beth Levie
"Barwood Driver Income: AFL-CIO Assumptions vs. Actual Data"
Drivers' Post-mediation Position Statement (abridged)
Barwood message to drivers
Councilmembers' memo to Al Roshdieh, October 23, 2015
MCPDU letter to Al Roshdieh, November 12, 2015
County Attorney Bill Review Memorandum, January 5, 2016
COMCOR 53.223.01
F:\LAW\BILLS\l
553
Taxicabs - Credit Card Transactions\TE Memo.Docx
1
3
4
8
9
11
13
14
15
17
19
25
27
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Expedited Bill No. -"-"'--'-"------
Concerning: Taxicabs - Credit Card
Transactions
Revised: 12/03/2015
Introduced:
-~~}Q§[J;h~~-­
Expires:
--~~~~----
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: - - - - - - - - - -
Sunset Date:
_.:..:.~=--------
Ch. _ _ , Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsors: Councilmembers Eirich and Riemer
AN EXPEDITED ACT
to:
(1)
limit the amount a licensee may charge a driver or affiliate for processing a
credit card transaction;
(2)
amend the requirements for credit card processing systems in taxicabs; and
(3)
generally amend County law concerning taxicabs.
By amending
Montgomery County Code
Chapter 53, Taxicabs
Sections 53-218 and 53-313
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deleted.from existing law by original bill.
Added by amendment.
Deleted.from existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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EXPEDITED BILL NO.
53-15
1
Sec 1. Sections 53-218 and 53-313 are amended as follows:
53-218. Responsibility of licensees, affiliates, and drivers.
2
3
4
*
(f)
(1)
*
*
A licensee must not impose on a driver or affiliate:
a charge of more than [1
%
over bank, merchant services and
equipment provider] the fees paid by the licensee [on] for
processing any credit card transaction; or
(2)
any other charge of a type or amount other than those on the list
adopted by regulation under Section 53-111.
5
6
7
8
9
10
11
*
*
(b)
( 1)
(2)
*
*
*
*
53-313. Passenger receipts; credit card transactions.
12
13
14
15
16
17
18
19
20
Any system or service used to process credit card transactions must:
be compliant with all applicable tax laws; and
[accept payment through any County user-side subsidy program;
and
(3)]
be approved by the Director.
*
*
*
Sec. 2. Expedited Effective Date.
The Council declares that this legislation
is necessary for the immediate protection of the public interest. This Act takes effect
on the date when it becomes law.
Approved:
21
22
23
Nancy Floreen, President, County Council
Date
0
f:\law\bills\1553 taxicabs - credit card transactions\bill 1.docx
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LEGISLATIVE REQUEST REPORT
Expedited Bill 53-15
Taxicabs
-
Credit Card Transactions
DESCRIPTION:
Expedited Bill 53-15 would refine existing provisions of the law
related to processing credit card payments for taxicab service. These
provisions were added to the law by Expedited Bill 53-14, which was
enacted earlier this year and substantially revised Chapter 53.
Specifically, the Bill will prohibit licensees from charging drivers
and affiliates more than the actual cost to the licensee for processing
a credit card transaction, and will make it easier for drivers to use
their own credit card processing systems.
Some PVL licensees continue to charge drivers and affiliates
substantial fees for processing credit card transactions.
Ensure that taxicab drivers and affiliates are able to reliably process
credit card transactions at the lowest cost.
MCDOT
To be requested.
To be requested.
To be requested.
To be researched.
Josh Hamlin, Legislative Attorney
To be researched.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENAL TIES:
NI
A
f:\law\bills\1553 taxicabs - credit card transactions\lrr.doc
(j)
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ROCKVILLE, MARYI.A'l\JD
MEMORANDUM
January 15, 2016
TO:
Nancy Floreen, President. County Counci
FROM:
~
Jennifer A. Hughes, Director. Office of Ma etnent
an.~ ~~get
Joseph F.
Beach, Director, Department
of ·
nc~~
..
FElS
for
Bill 53-15E, Taxicabs-Credit Card
Transactfu
SUBJECT:
~
Please find attached the fiscal and economic impact statements for the above-
.referenced legislation.
JAH:fz
cc:
Bonnie
Kirkland, Assistant Chief
Administrative
Officer
Lisa Austin, Offices of the County Executive
Joy
Nunni~
Special
Assistant
to the
County
Executive
Patrick Lacefield, Dire.ctor, Public
Information Office
Joseph F. Beach, Director, Department of Finance
Al Roshdieh, Acting Director, Department of Transportation
David Platt, Department of Finance
Brady
Goldsmith,
Office of
Management
and Budget
Ale.x Espinosa,
Office
of Management and Budget
Naeem
Mia. Office of Management and Budget
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Fiscal Impact Statement
Expedited Bill 53-15, Ta.xicabs - Credit Card Transactions
1.
Legislative
Summary.
This bill will limit taxi cab
fleet
owners from charging drivers more ihan. what they are
charged
by
banks for
credit
card processing
2.
An
estimate of
changes in County revenues and expenditures regardless of whether the
revenues or expenditures
are
assumed in the recommended or approved budget. Inc1udes
source ofinformation, assumptions, and methodologies used.
None
3. Revenue
and
expenditure
estimates
covering
at least the
next
6 fiscal years.
None
4. An actuarial
analysis
through
the
entire amorti7,ation period
fpreas;Q:.bil,Lthat~ohld
affect
retiree pension or group insurance costs.
·
·
N.A.
5. An
estimate of
expenditures
related to County's
information
teclmology
(IT)
systems,
including Enterprise Resource Planning (ERP) systems.
None
6. Later actions that may affect future. revenue and expenditures
if
the bill authorizes future
spending.
None
7. An
estimate
of the
staff
time
needed
to
implement
the bill.
None
8.
An
explanation of how the addition of new staff responsibilities would affect other duties.
No new staff responsibilities
9.
An
estimate of costs
when.
an additional appropriation is needed.
None
10. A description of
any
variable that could affect revenue 'md cost estimates.
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None
11. Ranges of revenue or expenditures
that
are uncertain or difficult to
pr~ject.
None
12.
If
a bill is likely to have no fiscal impact,
why
that
is
the case.
This is an amendment to an already existing law and is meant to give
taxi
drivers more
protection from what the fleet owners can charge them. No funds pass through the County.
13. Other fiscal impacts or comments.
None
14. The following contributed to and concurred vvith this analysis: Anthony Alexiou, DOT
-1/J5-/r---=l'2-...-.
-
Date
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Economic Impact Statement
Bill 53-tSE, Taxicabs - Credit Card
Transactions
Background:
This legislation would limit the amount a licensee may charge a driver or affiliate for
processing a credit card transaction
and
amend the requirements for credit card
processing systems in taxicabs.
Bill 53-1 SE
amends Section 53-2
J
8 of the County Code
such that a licensee may not impose <ma driver or affiliate a charge of more
than the
fees
paid
by
the licensee for processing
any
credit card transaction.
l.
The sources of information, assumptions, and methodologies used.
The source of infonnation is the Montgomery County Department of Transportation
(DOT). There
a.re
no assumptions or methodologies used in the preparation of the
economic impact
stat~ment.
The redm.iion in the charges that a licensee receives for
processing a credit card transaction is offset
by
the decrease in the driver's cost to
operate the taxicab. Therefore, there is a revenue loss to
the
licensee but an equal
gain to the driver because of the reduced fee.
2. A description of any variable that could affect the economic impact estimates.
There are no variables that could affect the economic impact estimates. \.V1rlle there
is a negative economic impact on the licensee, the impact is directly offset
by
a
positive economic impact on
the
driver;
3. The Bill's positive or negative effect,
if
any on employment, spending, saving'S,
investment, incomes, and property values in the County.
Bill 53-15E would have no economic impact on employment, spending, savings,
investment, incomes, and property values in the County. It is a zero sum economic
impact~.
on.e agent gains a benefit (reduced transaction cost) while the other agent
losses a benefit (reduced transaction fee).
4.
If
a Bill is likely to have no ecQnomic jnipact,
why
is that
the case?
Plea'3e see
para!:,~ph
#3.
5. The following contributed to or concurred
with
this analysiS:
David
Platt and Rob
Hagedoom, Department Finance; Tony Alexiou, Department of Transportation,
ritf2+·
Pagel of l
I
/.,
I
[k ___
.
(j)
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Testimony of County Executive Isiah Leggett
Bill 53-15
January 19, 2016
Good afternoon Council President Floreen and Council Members. My name is Al Roshdieh and
I am the Acting Director for the Montgomery County Department of Transportation. I am here
today testifying on behalf of County Executive Isiah Leggett regarding Bill 53-15 and its
proposed amendments to Sections 53-218 and 53-313 of the County Code.
The County Executive does not object to this bill. He is concerned, however, about the
unintended consequences of this bill for the County's seniors and disabled residents who rely on
Call-N-Ride for their transportation needs.
Expedited Bill 53-15 amends the County Code to preclude taxicab companies from imposing
upon drivers any charges in excess of the fees paid by the taxicab companies for processing
credit card transactions. This
part
of the law is clear, but the Department needs the ability to
verify that the companies are in compliance with the law. At the very least, we request that the
bill be amended to include a requirement that the companies certify to the Department that they
are not adding additional processing fees over and above what they are paying.
The Bill also repeals the current requirement that every system used in a taxicab to process credit
card transactions also be able to process payments for the County's "Call-N-Ride" program. The
Call-N-Ride program offers subsidies to low-income persons who are elderly or have disabilities
and need transportation for medical appointments. The Call-N-Ride program only processes
subsidy payments through electrQnic means because the previous paper voucher system was
susceptible to fraud and abuse.
In
order to avoid disruptions in service to those who are eligible
for and heavily rely on the Call-N-Ride program, the Bill should be amended to require that a
system be in place to process Call-N-Ride payments.
Thank you for the opportunity to express the Executive's views on this Bill. My staff and I look
forward to further discussing these points in greater detail during the T &E Committee session in
February.
{j)
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BARWOOD
Testimony of Lee Barnes
EXPEDITED BILL 53-15, TAXICABS-CREDIT CARD TRANSACTIONS
*
January 19, 2016
Good afternoon Madam President and Council members. I'm Lee Barnes, President of
Barwood Transportation. Thank you for allowing me to express my concerns with Bill
53-15 and to respectfully ask that you vote against this legislation.
53-15 raises more questions than it answers. It reflects an oversimplified perception of
how credit card transactions are processed. It calls into question the continuance of
Call-N-Ride. It oversteps the authority given to the newly created Taxicab Commission
and places an even greater burden on locally regulated taxi service.
First, the bill adds the term "processing" to Chapter 53, as it relates to credit card fees.
But what exactly does processing mean? The law that went into effect less than four
months ago referred to "bank, merchant services and equipment provider fees." 53-15
replaces that language with "processing" yet provides no definition of the word.
The most important thing to understand is this: The fee charged by a financial institution
is just one of the many costs taxicab companies incur when customers pay by credit
card. We also pay fees for the credit card terminals, as well as for the secure software
used to process the transaction and collect the data required by County and federal law.
DRIVEN FOR EXCELLENCE
1
4900 Nicholson Court, Kensington, Maryland 20895 • 301. 984.8294 • 800.521. 9077
http://www.barwoodtaxi.com
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The second question relates to the unintended consequence that 53-15 will have on
providing Call-N-Ride services. The bill eliminates the requirement that a credit card
system accept payment for County subsidized services. Many drivers are now using
technology such as Square to take customer payments, even though this method has
not been approved by DOT. If this is the direction the Council wishes to take, Barwood
will no longer be able to maintain the safer and more secure credit card equipment
currently in the back seats of our taxis.
Here's why: First of all, while popular with some drivers, technology such as Square
doesn't allow for processing County-subsidized services. If we are only to use our
equipment for processing Call-N-Ride - which does not generate revenue for taxi
companies - we will not be able to fulfill our revenue obligation with the equipment
provider. They will remove their equipment, leaving the County with no way to process
Call-N-Ride services. Surely that is not the Council's intention.
Third, Bill 53-15 calls into question the purpose of the Taxicab Commission. Just last
year the Council created a Taxicab Commission to examine issues such as this and
provide recommendations. I ask that the Council give the Commission the opportunity to
do its work before considering more new laws that hurt the taxicab industry and could
negatively impact County services.
I am more than willing to sit down with each member of the Council to discuss the
breakdown of our credit card transaction costs and what is actually charged to the driver
so the Council can make an informed decision on Council Bill 53-15.
Thank you for your consideration.
2
DRIVEN FOR EXCELLENCE
4900 Nicholson Court, Kensington, Maryland 20895 • 301. 984.8294 • 800.521. 9077
http://www.barwoodtaxi.com
.4-li-',
"~_f"_,'
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Beth Levie, 9402 Russell Rd Silver Spring 20910, blevie@aflcio.org 202 285-3667
My name is Beth Levie. I work for the National AFL-CIO and live in
Montgomery County. I am testifying in favor of expedited Bill 53-15. In
recent years, the AFL-CIO has been working to help organize hundreds of
thousands of workers in this Country that are classified as independent
contractors. These workers have no legal right under US law to earn
minimum wage; are not covered by workers' compensation, overtime rules
or other workplace protections; and do not receive social security or
unemployment benefits. One of the ways these workers gain protections is
through legislation such as the legislation that was signed into law this
summer. We thank the council for voting 9-0 for reforms that will regulate
the taxi industry through uniforms leases and caps on rent and other fees,
and a fair dispute resolution system.
Lowering the credit card rates have always been central to the drivers'
struggle. Why, because more customers want to use their credit cards;
accepting payment is mandated by County law; and a company with a high
credit card ran can decrease a driver's income by 10°/o or much more.
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For example a driver works
338
days and takes in
$82,000
in fares and
$4453
in tips together its
$86,453.00.
Drivers estimate that currently
70o/o
of
all fares paid with credit cards. In our example, that would be
$60,517.
Barwood charges drivers
7.45°/o
which would be
$4,508
credit card costs to a
driver. When you take rent in to consideration --
$33,000 -
and the cost of gas
- about
$14,000 --
the driver is left with
$39,453.
Subtract
$4508
in credit
card charges and now he is taking home
$34,945.
That's
13%;
not
considering other fees and other expenses which would make the credit card
expense an even larger portion of his take home income.
It
looks even worse for a driver what takes in only
$54,000
in fares and
tips. Using the
70%
estimate, that means
$37,800
of his fares and tips via
credit card, yielding
$2,816
credit card charges. After subtracting
$33,000
in
rent,
$10,000
for gas, and
$2816
in credit card fees, the drivers is left with
$8,184.
His credit card fees would represent
31
%
of his earnings.
The County can do something about this and bring fees charged to
drivers in line with other merchants' fees for credit card use. Please pass
legislation that works to lower credit card cost to drivers.
@
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BARWOOD DRIVER INCOME: AFL-CIO ASSUMPTIONS VS. ACTUAL DATA
1/27/16
Assumptions
AFL-CIO
Actual
Actual
Average Barwood Driver
Barwood Driver
Hypothetical Driver
2014
2014
$82,000 Annual Revenue $82,083 Annual Revenue $69,224 Annual Revenue
Annual Days Worked (Meter Days)
Fares Collected
Tips Received
(by
credit card - does not include cash tips)
Total Driver Revenue (less cash tips)
Percentage of Fares Collected
by
Credit Card Transaction
Gas (see
*
and
**)
Lease Fees or Rent
Estimated Credit Card Charges
Net Earnings
338
$82,000.00
$4,553.00
$86,000.00
70.00%
-$14,000.00
-$33,000.00
-$4,500.00
$34,000.00
331
$82,083.00
$4,454.00
$86,537.00
38.87%
-$6,315.80
-$24,500.00
-$2,536.21
$53,184.99
320
$69,224.00
$4,047.00
$73,271.00
43.00%
-$6,315.80
-$24,500.00
-$2,366.42
$40,088.78
Assumption of gas cost of
$14,000/$2.00
per gallon=
7,000
gallons used. At MPG of
19,
this means the driver would have
driven
133,000
miles in one year.
*
AFL-C/O Assumption:
**
Barwood Data: Drivers average
60,000
miles per year, divided by
19
miles per gallon=
3160
gallons x
$2.00
=
$6,315.80
CONFIDENTIAL
&
PROPRIETARY
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SHERMAN, DUNN, COHEN. LEIFER&YELLIO. P.C.
Hon. John M. Glynn
November 13, 2014
Page 3
Standard Lease Cap Rates. An Owner of a Taxicab can charge a lease rate to a
Driver that is not greater than the following Standard Lease Caps:
$105, for all 12-hour day shifts
$115, for the 12-hour night shift on Sunday, Monday and Tuesday
$120, for the 12-hour night shift on Wednesday
$129, for the 12-hour night shifts on Thursday, Friday and Saturday
$630, for any one-week day shift for one week or longer
$737 for any one week night shift for one week or longer.
-
?
2.
Drivers should be able to determine their own means to accept credit cards,
and a 5% maximum charge to drivers should be imposed where a company's
terminal is used
As you know, the majority of cab drivers in Montgomery County are forced to
pay exorbitant fees to process credit card transactions. Those fees can range from
5% to as high as 7.9% (8.5% in some instances) for Earwood drivers. Your report
should recommend that the County set certain standards that must be met and
allow drivers the freedom to choose a credit card terminal that best fits their needs.
If,
however, the drivers are forced to use company terminals, then the county should
set the maximum credit card fee at 5%. That type of system is consistent with those
in surrounding jurisdictions.
For example, in Alexandria, Section 9-12-32(t)(l) of the Alexandria Virginia
Taxi Ordinance mandates a 5% maximum percentage credit card fee if a certificate
holder mandates that its affiliated drivers
use
a specific credit card processor.
It is important
to
remember that each driver in Montgomery County is
treated as an independent contractor. Although the drivers understand the
County's need
to
mandate that credit cards be an acceptable form of payment, as
independent contractors, the drivers should be the ones to determine how best to
meet such a mandate. It is the drivers, and not the fleet companies, who depend
upon the customers' fare to run their business. The City of San Francisco has
recognized this very basic idea.
Section 1124-(d)(l) of the San Francisco
Transportation Code stipulates that a driver has the right to choose a credit card
payment processing merchant account service so long as it conforms to the
standards placed by the city. No fleet company, under the San Francisco Code, may
retaliate against a driver for electing, or not electing, to establish his or her own
credit card processing account.
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Page 1 of3
BARWOOD
TAXI SE RV ICE
301.984.1900
Follow Us:
Dear Valued Driver,
On Tuesday, July, 21, 2015 Expedited Bill 53-14 was signed
into law. There have been many rumors about these
changes. This communication will separate the myth from
the facts.
What You Need to Know
Effective Date of the changes:
There are several changes but they are effective at
different times. Changes are either:
• Effective upon approval by the Director of
Montgomery County's Department of Transportation.
• Effective October 1st, 2015
More individuals can own PVLs
PVL ownership is no longer restricted to only 20% for
individuals. The County will issue new PVLs over the next
six months.
However, NEW PVLs are not transferable, meaning
they can NEVER BE SOLD.
If you get a new PVL from the County you can't sell it, will
it to your children or spouse, you can only run it as a taxi.
Existing PVLs will be grandfathered in, meaning IF you
currently own a PVL or buy a PVL that was first issued
before January 1st, 2015 then you are allowed to sell
that
PVL for its value.
So now is a good time to own a PVL that still has value! We
have a list of available PVLs. If you're interested in owning,
email ptp@barwoodinc.com or call Vanessa Curtin 240-514-
1232.
PVL Leasing
The County is currently designing regulations for leasing a
PVL. They expect to be finished with these regulations in
approximately 3 months. Therefore you will have to wait 3
months or longer to lease a PVL. As soon as we have more
information, we will let you know.
However, keep in mind there are more advantages to
owning a PVL.
Card Swipe Devices
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Page 2of3
There has been a lot of misinformation about the use
of card swipe devices, such as Square. Here are the
facts:
• All devices MUST be approved by Montgomery
County's Director of Transportation
• All devices MUST be able to integrate with the fleet
dispatch system and must integrate with and accept
user side-subsidy programs like, Call N Ride
• Per Chapter 53 Code section 53-313. Any system or
service used to process credit card transactions MUST
meet these requirements.
• It
is a violation of Chapter 53-313 to use non-
approved swipe devices.
Fees
There is NO change to current lease rates. There are
rumors that lease rates were lowered by the County. This is
NOT true.
The Department of Transportation will set a
maximum
lease
rate but as a private business, each fleet and affiliate owner
will individually decide what they charge to lease their
vehicles. This will be based on their brand, dispatch and
costs.
Credit Card Fees
Barwood's Technology Marketing and Service Fee (TMSF)
covers all equipment provider costs, such as bank merchant
fees, credit card charge-back fees, transaction fees and air
time fees, plus all fees for Call N Ride processing.
Per Chapter 53-218, we are allowed to collect for all of
these fees plus 1
%.
Over the last month we have been testing new software in
an effort to bring down the costs. Unfortunately, this has
also stopped our direct deposit ACH process.
We were successful in bringing the cost down somewhat.
So, effective later this week our TMSF fee of 7.95% will
change to 7.45% We will no longer charge our own .50%.
However it
will
require the distribution of manual checks for
a bit longer.
We fought for other changes that would be very positive for
drivers, like dynamic fare pricing, when customers use our
taxi app. This would allow surge pricing similar to TNCs, like
Uber and
Ly~
and drivers could make more money.
However, some drivers fought this fare flexibility and the
dynamic pricing model was voted down.
This is the first in many communications in regards to these
changes. Future communications will discuss:
Our new taxi booking app
Positive changes to our dispatch system
A new marketing team and plan to get more fares
New driver incentive plans
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4
11
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MONTGOMERY COUNTY COUNCIL
ROCKVJL.l.E, MARYL.AND
October 23, 2015
Mr. Al Roshdieh, Acting Director
Montgomery County Department of Transportation
10 I
Monroe Street,
I
Olh
Floor
Rockville, Maryland 20850
Dear Mr. Roshdieh:
Earlier this year, the County Council passed, and the County Executive signed, Bill 53-14 to tegulate the
taxicab industry. We appreciate the work that is being done in your department to enact the new
requirements of the
Jaw-and
to that end, we wanted to make you aware of several concerns we have
regarding the recovery of costs associated with credit cards.
As enacted, Section 53-218 of Bill 53-14 contains the following provision:
A licensee must not impose on a driver or affiliate:
(1)
a charge of more than 1% over bank, merchant services and equipment provider
fees paid
by
the
licensee on
any
credit card transaction; or
(2) any other charge ofa type or amount other than those on the list adopted by
regulation under Section 53-111.
It
has been brought to our attention that Barwood Taxi company may be circumventing this section of the
law. In a memo to its drivers addressing credit card fees, Barwood st.ates
it
has reduced its "Technology
Marketing and Service Fee" (TMSF) from 7.95% to 7.45%. However, the company does not state the
actual costs of the credit card transaction. It seems unlikely that the credit card companies are charging
6.45% for their services.
Further, the fees subject to the I% limit must be "paid by the licensee on any credit card transaction."
This means that if the licensee rents or leases equipment for a set amount, it
cannot
try
to pro-rate that
cost and pass it on as a per-transaction cost for the driver. It can, however, pass that cost along to drivers
as part of the lease or as a separate fee. We are concerned that taxi companies may
be
playing
fast
and
loose with the interpretation of "any credit card transaction,'' and may be "packaging" other expenses
alongside those permitted by this provision.
STELi.A 8. WERNER
COUNCIL.
0F'FICE
6UlLCllNG '
l 00 MARYL.ANO AVENUE'. • ROCKVILLE, MARYLAND
20850
240/777·7900
• TTY 240/777-7914 • FAX 240/777·7989
WWW. MONTGOM ERYCOUNTYMO.GOV
0
PRINTED ON RE:GYCL.!0 PAl"EA
@
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Mr. Al Roshdieh
Page2
Therefore,
we would
like
you to determine what is being included in these charges-including the 7.45%
charge being passed on to drivers
by
Barwood-so that we
may
assess whether additional legislation is
needed to address or clarify this issue.
Finally,
it
is our understanding that DOT requested the adopted amendment to the Bill requiring that any
alternate card swipe device be able to accept Cal.IN Ride cards. We would like to know whether DOT
has identified any such devices that can accept Call
N
Ride.
If
not, we'd like
to
discuss the possibility of
an interim solution to expedite approval of an alternative for drivers.
We appreciate your prompt response, as these are urgent financial issues that directly impact cab drivers
across our county daily.
Sincerely,
Sidney A. Katz
Marc Eirich
George Leventhal
Roger Berliner
Tom Hucker
Nancy Navarro
Hans Riemer
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MONTGOMERY COUNTY PROFESSIONAL DRIVERS UNION
November 12, 2015
Mr. Al R. Roshdieh, Acting Director
Montgomery County Department of Transportation
Tenth Floor
I 01 Monroe Street
Rockville, MD 20850
Re:
The 2015 Reformed Montgomery County Taxicab Industry Regulations, Implementation
and, Enforcement.
Dear Mr. Roshdieh,
The Montgomery County Professional Drivers Union -MCPDU, write to:
1. Ask for clarification of some sections of the County's newly reformed and passed taxicab
industry regulations.
2. Seek explanation to some disturbing and misguided interpretations of some of the sections of
the law thus far offered by your office and Barwood Taxi Company..
On July 31, 2015, the County Executive signed the Expedited Bill 53-14 into law. While most elements
of the Bill have later effective dates, some aspects of it became immediately effective to give the fleet,
drivers and affiliates the much needed immediate relief on a faster timeline and earnestly begin the
process of mending the County's badly broken taxicab system.
On October 1, 2015, a number of the aspects of Bill 53-14 became effective. Amongst them are:
A
issues with credit card as a form of fare payment;
J..
daily lease and affiliation fees capping;
A
uniform lease agreement/contract form and;
J..
dispute resolution procedure.
Most drivers are confused with all sorts of explanation coming from your office per your letter to Ms.
Beth Levie and, from CCTI per Mr. Lee Barnes memo to Barwood drivers. We are aware that you,
and the council members, have read Mr. Barnes interpretation of the law as it pertains to his business.
We are also aware that seven of the council members feel the same way the drivers feel about his
outlandish interpretation .. The seriousness of this issue for drivers cannot be understated. We pay
thousands of dollars in credit card fees. One driver, among many who paid exorbitant fees, paid $5,000
in fees last year. Per Barwood daily rent calculation formula, $5,000 divided by 312 days would be
$16.03. When this figure is added to this driver's fixed daily rent of $111.30 on a 2010 Ford Crown
Victoria, his daily average rent would be $127.33. Could you possibly imagine what it would cost this
driver daily to operate a taxicab in Montgomery County after all other fees such as $3.00 late fee and
fuel cost are added?
Mr. Roshdieh, you are an intelligent, well-schooled and personally good-natured man but, you seem
lacking in knowledge of the facts of the industry.
It
is high time you took an honest and critical look at
the County's entire taxicab industry. This includes but not limited to the innate purpose of the industry
creation; the identified and potential needs of all the players in the industry; the financial versus public
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interests of the industry's players; the purpose and duties of the active players or executors in the
industry; the areas of success and failures of the active players; the overall health of the industry and,
most importantly, the County's residents level of satisfaction with the industry's services.
The groups of players in the industry consists of the three branches of the County Government through
their specific Departments; the County residents; the taxicab companies and the taxicab drivers. The
most active players include the DOT, the residents, the cab companies and, the drivers. With all these
interrelating bodies, the industry's problem today is well beyond the issues between the drivers and the
companies. The obvious partiality of the Executive branch and its DOT in enforcing some aspects of
the industry's regulations is the biggest single hindrance to the quality of service the drivers deliver to
the residents The drivers quest for survival urges them to do all they can do to maintain good working
relationship with the customers .but, the companies constant and senseless exploitative acts which are
often deliberately overlooked by the DOT badly inhibit the drivers efforts This favoritism seem to have
accomplished only one goal -
FAILURE TO PROVIDE EFFICIENT TAXI SERVICE TO THE
COMMUNITY.
Mr. Roshdieh, the drivers need relief and
they need it now!
We cannot wait for bureaucracy to play out
and so, we will ask you to clarify the following sections of Expedited Bill No 53-14 so we can go about
our business and actually experience the true meaning of having a process expedited:
1. 53-218: Responsibility of Licensees, Affiliates and Drivers:
A) Subsection (e)(5) states:
"not require a driver or affiliate to use fleet or association system for processing credit
card transaction ...... "
You must agree that this subsection is self-explanatory.
It
simply states that any driver or
affiliate who does not like the service fees offered by any fleet or association
DOES NOT
HAVE TO USE THE FLEET'S OR ASSOCIATION'S SYSTEM
to process credit card
transactions.
If,
however, our interpretation of this law is incorrect, please feel free to
explain to us what it is actually saying.
B) Subsection
((f)
lines 533
537) states:
" A licensee must not impose on a driver or affiliate a charge of more than 1
%
over bank, merchant
services and equipment provider fees paid by the licensee on any credit card transaction ....... "
Barwood,s interpretation of this same subsection to Barwood drivers and affiliates which was titled
"Credit Card Fees" states:
"Barwood's Technology Marketing and Service Fee (TMSF) covers all equipment provider costs,
such
as
bank merchant fees, credit card charge-back fees, transaction fees and air time fees, plus all
fees for Call N Ride processing. Per Chapter 53-218, we are allowed to collect for all of these fees
plus 1%"
We all do in fact understand that Barwood is a legitimate private business entity which has the right to
charge whatever it chooses. We all also do understand that the drivers and affiliates are legitimate
private business persons and/or entities who have the right to choose what they believe is best for their
businesses.
Barwood may have invested millions of dollars into its business and hopes to make substantial profit to
be comfortable with its operation. By the same token, the drivers and affiliates invested hundreds and
thousands of dollars and likewise hope to make adequate profit to sustain their businesses. Since none
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of the parties invested to lose, the question becomes, 'how must one invest to insure a good and steady
rate of return without tilting the balance?' In a market full of sellers and buyers of similar items, one
logical answer to this question would be to invest wisely so to minimize pitfalls. Another logical
answer would be for the buyers to purchase the lowest priced and equally effective item that would
serve the investment purpose.
Now, back to the true meaning of 53-218. The first two lines (533 and 534)- per Councilmember
Sidney Katz's amendment of7/21/15 at 2:16pm clock time states, "A licensee
MUST NOT IMPOSE
on a driver or affiliate a charge of more than 1% over bank .... "
Barwood's Credit Card Fee declaration states, "Barwood's Technology and Service Fee (TMSF)
covers all equipment provider costs ..... " This is way more than necessary to provide this service.
The drivers and affiliates found a cheaper way to provide the same service to their customers. This
enables them to better manage their business, make ends meet and possibly make marginal profit.
For Barwood to tell the affiliates and drivers that using their individual devices to perform credit card
transactions is a violation of Chapter 53 is unfounded and irresponsible. Barwood
MUST BE
RESTRAINED
from using falsified interpretations of the County code as a shield to protect the
owner's bad business decisions.
2.
53-313: Passenger Receipts; Credit Card Transactions:
Mr. Roshdieh, to say that we are disappointed in you and your response letter of October 15, 2015
addressed to Mrs. Beth Levie in regard to the use of individual credit card processing device by drivers
and affiliates would be a gross understatement. You are supposed to be the custodian and the enforcer
of the law and, you are supposed to be fair to all and trusted by all. How could you write such a biased
letter that reads so much like something out of Mr. Lee Barnes own office?' Do you really think so little
of drivers that we cannot be responsible charging customers on devices that are used in all sectors of
the economy?
It
is very unfortunate you chose at this time to narrowly interpret the new reforms.
Nevertheless, as far as this section which formed the base of both of your letter and that of Mr. Barnes
to the drivers and affiliates goes, we offer the following. For ease of reference, we quote this same
section 53-313:
"(a) A driver must give each passenger a receipt showing the name of the fleet or association, the
time and place of origin and destination of each trip, and the amount of the fare, on a form
authorized by the Department, unless the passenger declines to receive the receipt.
(b) Any system or service used to process credit card transaction must:
1.
be compliant with all applicable tax laws
2. accept payment through any County user-side subsidy; and
3. be approved by the Director".
Mr.
Roshdieh, 53-313 clearly relates to fleets' and/or associations' existing and already approved
operating systems. As indicated by these statements:
"A driver must give each passenger
a receipt showing the name of the fleet or association
on a form
authorized by the Department. ... " and
"Any system or service
used to process credit card transaction must accept payment through any
County user-side subsidy program ..... "
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The fact that drivers are required in this section to give receipts to passengers who may need to have
receipts is simply because:
1. the drivers are the closest "representatives" of the fleet or association to the passengers;
2. the drivers are the ones who provided the actual service to the passengers and;
3. the drivers are capable of operating the fleet's or association's on-board system that is equipped
to produce the approved form of receipt.
If
the phrase, "A driver" were removed from this section, it would become much clearer that the section
is addressing the responsibilities of a fleet or association. When the drivers owned and operated
cooperative is up and running, this section would then apply to us as a fleet. All that we ask for at this
time is to be able to freely exercise our rights by using our individual and lawful devices to process
regular credit cards while we continue trying to provide better service to the customers.
As for the user-side subsidy (Call
N
Ride), we have the following to propose:
1. In order
tq
accommodate all riders, we propose to use the fleet on-board system to service the
program and then pay 1% processing fee on each transaction to the fleet, or
2. That the Department makes arrangement to award each driver the contract to individually
service the program as an entity. This would then enable the DOT to inspect and approve each
contractor's device or system or service according to regulations, or
· 3. That the Department exempts drivers from servicing the program since (as in the case of
Orange Taxi Company which had been exempted from the same because it has less than 29
vehicles in its fleet) no driver has enough number of vehicles to be considered a fleet.
Reduced Taxicab Insurance Requirement:
The next big, or even bigger, issue on our (drivers) minds is to find out exactly when the reformed
insurance requirement of 50/100/25 became effective. The reduction of insurance requirement to the
level ofTNCs State requirement, we understood, is to even the playing field across the board with
TNCs. This means that the fleet and private owners would get to pay less monthly premium on the
vehicles insurance coverage. This also means that the drivers would get to pay reduced daily premium
on the vehicles they drive which,as a result, would immediately reduce the daily lease on the vehicles.
Mr. Roshdieh, why is
Mr.
Lee Barnes telling drivers that the Department is responsible for the
companies uphold of the current lease rates because of its delay in setting the lease cap? We know that
lease cap setting has nothing to do with the immediate realization of cost savings prompted by the
insurance requirement reduction. We demand immediate enforcement of this law..
Immediate Relief Needed
Mr. Roshdieh, we, the drivers and private owners who are lawfully licensed by Montgomery
County to do business in the County as law abiding citizens and entrepreneurs have decided to
STOP
being pushed around by the fleet owners whom your office is aiding by its inaccurate interpretation of
the law. We have therefore resolved to take the following actions, and more as the need may be, until
all of our concerns are thoroughly, rightfully and, conclusively addressed:
1.
Per 53-218 (e)(5) -
"not require a driver or affiliate to use the fleet or association system
for processing credit card transactions ....."
Effective immediately:
0
We will stop providing service to credit card customers through the fleet or association
system.
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0
We can
ONLY
process credit card transactions through our individual devices unless the
fleet or association can beat or match the processing fees charged by our merchant and
equipment provider and/or the bank.
2
Per 53-224 -
"Insurance required"
provision:
J...
On October 1, 2015, the reformed minimum vehicle insurance coverage became
effective. According to Amalga