What to Know
- New York's attorney general announced plans Thursday to sue New York City for $810 million for inflating the price of taxi medallions, which were marketed as a sure-fire investment before ride-hailing apps upended the taxi industry
- Attorney General Letitia James filed a notice of claim against the city, which she said auctioned off medallions at artificially high prices between 2004 and 2017
- The value of a medallion has plummeted from over $1 million in 2013 to less than $200,000 now, leaving thousands of owner-drivers buried in debt. Uber and other ride-hailing apps have taken much of the blame for the crash
New York's attorney general announced plans Thursday to sue New York City for $810 million for inflating the price of taxi medallions, which were marketed as a sure-fire investment before ride-hailing apps upended the taxi industry.
Attorney General Letitia James filed a notice of claim against the city, which she said auctioned off medallions at artificially high prices between 2004 and 2017 and continued to market the medallions at overvalued rates even after internal reports raised warnings about inflated values.
"Government should be a source of justice, not a vehicle for fraudulent practices," said James, a Democrat.
The city made $855 million on sales of medallions, the licenses that allow a person to operate a yellow cab, between 2002 and 2014 when it stopped holding medallion auctions.
The value of a medallion has plummeted from over $1 million in 2013 to less than $200,000 now, leaving thousands of owner-drivers buried in debt. Uber and other ride-hailing apps have taken much of the blame for the crash in the medallion market but critics have also blamed the city and lenders who pushed immigrant drivers into risky loans.
City officials adopted a moratorium on new licenses for Uber and other for-hire vehicles in 2018 and extended it last year, but they have not yet taken action to provide relief to debt-ridden drivers.
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A task force that studied the taxi industry released a report last month recommending that the city recruit "mission-driven" investors to help bail out struggling medallion owners. No action has been taken on the recommendations yet.
Freddi Goldstein, a spokeswoman for Democratic Mayor Bill de Blasio, said the mayor and his administration have spent six years "putting money back into the pockets of drivers and attempting to curb the harm from Uber years before anyone else wanted to recognize the threat." She added, "If the attorney general wants to launch a frivolous investigation into the very administration that has done nothing but work to improve the situation, this is what she'll find."
But Bhairavi Desai, the executive director of the New York Taxi Workers Alliance, a labor organization for drivers, hailed the attorney general's announcement. She said restitution from the city "is long overdue and we hope just the beginning as we continue our fight for debt forgiveness and lesser monthly mortgages."
