Toronto cab scam and the risks of regulation

Canada’s National Post reports that what police consider to be probably a “network of a few people” at more than one cab company have been victimizing unwary riders by sliding their bank cards through an unauthorized point-of-sale machine and handing a replica card back to them. The card is then used to drain the victim’s bank account. TD Bank alone says it is handling 65 claims following this pattern. The online payment mechanism used in ridesharing services appears to be more secure against scams of this sort, but the operations manager for one of the taxi companies is touchy on that point: “To suggest that this has anything to do with taxis vs. Uber is ludicrous,” she tells the NP.

Which raises the question: if Uber and Lyft were the older technology, would cities following the Precautionary Principle legalize taxis for hail? Of course, to those of us who elevate principles of liberty over the regulatory precautionary principle, the answer is clear: legalize both kinds of service, and let consumers decide for themselves which risks they are willing to run. But wouldn’t it be absurd to ban the safer service and thus force people to use the riskier?


  • One reason why we need regulatory agencies is the partial failure of a pillar of the free market system, namely, that everyone has perfect information to make their purchasing decisions. So, for example, we need an FDA so that snake oil remedies that are not safe and effective are not sold to unsuspecting persons, where the adverse consequences to the purchaser FAR out way the money spent on the drug. Similarly, we need an Environmental Protection Agency to deal with EXCESSIVE external costs incident to a free market system.

    Unfortunately, the fourth branches of government have grown into untamable monsters that feed their own interests and grow way beyond what was envisioned by their original mission. This over-regulation then stifles the economy by either outright blocking useful products or services, or by adding significant costs. The overall result is that costs to the economy in certain instances, is higher than without regulation.

    Using sound economic principles, where only a few people get ripped off from problems particular to a segment of an industry, regulation is warranted only if the fix doesn’t cost more than the cost of problem it addresses.

  • Which is why, VMS, that these things ought not be done at the federal level but at the state where the citizenry stands a much better chance of reining in the bureaucrats.

    But my point actually is that it should not be a matter of “legalizing” taxis and Uber/Lyft but simply a matter of starting those businesses and the state staying out of the way. And if you’re really going to be libertarian about it, don’t even have laws about insurance. Have a law that says an injured passenger can sue the parent corporation for the actions of its independent contractor, and win. This will make the parent highly motivated to make sure that the drivers all have adequate insurance in the millions of dollars.

    • ” ought not be done at the federal level but at the state where the citizenry stands a much better chance of reining in the bureaucrats.”

      10 * 0 is still 0