A Minneapolis-based tech firm which
provides interactive video advertising to be displayed in Uber and Lyft vehicles
has sued the city of Chicago, saying the city’s rules forbidding the
ride-hailing services from displaying advertising on or in their vehicles,
while allowing traditional taxis to do so, unconstitutionally favors the taxis
at the expense of the other drivers.
On Feb. 2, Vugo Inc. filed its
complaint in Chicago federal court against the city, alleging City Hall’s
regulations violate Vugo’s rights under the U.S. Constitution’s First and Fourteenth
Vugo and its lawyers, with the
Chicago-based Liberty Justice Center, announced the lawsuit at a press event
Tuesday in Chicago.
In a release, Vugo’s attorney, Jeffrey
Schwab, said the ban on advertising in the vehicles operated through the
ride-hailing services amounts to the city improperly “picking winners and
losers in the economy.”
“We founded Vugo because we believed there was a genuine
opportunity for ridesharing drivers to enhance their customers’ ridesharing
experience. Vugo allows ridesharing drivers to provide riders with tailored
media, restaurant recommendations and information about local experiences,”
said Rob Flessner, CEO and
co-founder of Vugo, in a prepared statement. “Ridesharing
drivers are best equipped to determine the preferences of their riders, not the
city of Chicago.”
lawsuit centers on regulations imposed by the city in 2014 in what is commonly
known as the city’s ridesharing ordinance, which governs how services like Uber
and Lyft can operate in Chicago.
those rules, the ride-hailing service vehicles are barred from displaying any
commercial advertising on and inside their vehicles. Violators could be subject
to fines of $500 to $1,000 per violation.
city rules do not similarly prohibit such advertising from being displayed on
the exterior or interior of traditional licensed cabs operating in the city.
Taxi operators may apply for permits to display advertising either inside or
outside their vehicles, resulting in many taxis essentially serving as rolling
billboards on city streets and generating additional revenue for taxi
the lawsuit noted the city does not prohibit other passenger vehicles from
displaying advertising, reserving the restrictions solely for ride-hailing
other cities, including Los Angeles, San Francisco and Minneapolis, Vugo said
it contracts with Uber and Lyft drivers to advertise to passengers, typically generating
an additional $100 per month in income for the drivers.
Vugo’s service, drivers download an app onto tablet computers and create an
account. The app then generates interactive advertising, which can be tailored
to customers based on certain data, including “trip signals” and “city, state,
route, pick-up point for the trip, business category, specific keywords, and
the passenger’s destination.”
are displayed on the tablet, facing passengers, “only when a rideshare driver
has a passenger.”
passengers can then choose to interact with the ads on the tablet’s touch
said it is paid by the advertisers, and then pays a percentage of revenue to
drivers using its services.
Vugo indicated it would like to expand
its services to the Chicago market, but the city’s rules effectively block it
from the marketplace.
“Because of the ordinance, Vugo is completely unable to operate
its platform in Chicago - and Chicago
rideshare drivers are completely unable to display advertising provided by Vugo
- even as the city explicitly authorizes taxicabs to display advertising and
does not prohibit other passenger vehicles from doing so,” the lawsuit said.