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US New York ordered to pay $810 million to debt-hit taxi drivers

02:20  21 february  2020
02:20  21 february  2020 Source:   msn.com

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New York must pay $ 810 million to its debt -ridden cabbies, the state attorney general said Thursday, accusing the city of More than 950 licensed taxi drivers have declared personal bankruptcy since 2016, according to a New York Times investigation of court records published last year.

New York State’s attorney general has accused New York City of committing fraud by significantly inflating the value of yellow taxi medallions and demanded $ 810 million from the city to compensate the thousands of cabdrivers who are now saddled with debt . The city’s Taxi and Limousine

New York must pay $810 million to its debt-ridden cabbies, the state attorney general said Thursday, accusing the city of fraudulently inflating the value of permits needed to drive its famed yellow taxis.

a yellow car parked on a rainy day: New York's taxi industry has been upended by the arrival of ride-hailing platforms like Uber and Lyft © TIMOTHY A. CLARY New York's taxi industry has been upended by the arrival of ride-hailing platforms like Uber and Lyft

Letitia James, head prosecutor for the state of New York, said an investigation by her office showed that the auction price of thousands of permits, known as medallions, had been artificially inflated by hundreds of millions of dollars between 2004 and 2017.

The attorney general's office alleged that the Taxi and Limousine Commission knew in 2011 that the price of medallions had passed actual value.

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For more than a decade, New York City officials stood by while thousands of cabdrivers became mired in reckless loans that saddled them with debt they could But they did little to rescue the thousands of taxi drivers struggling with deep debt after buying a medallion, the city permit that allows drivers to

In light of the taxi driver suicides, Mr. Khosrowshahi said he would support a fee on Uber trips to pay for a “hardship fund” to support taxi medallion owners Medallions once sold for more than million and now go for as low as 5,000. Bhairavi Desai, executive director of the New York Taxi Workers

Yet the administrative body "published false and misleading medallion prices" in a number of cases, James' office said, causing the price of a single medallion at auction to spike from $283,300 in 2004 to $965,000 in 2014.

The city allowed brokers and top players to collude on prices, the prosecutor said, as the TLC encouraged drivers to use the medallions as collateral for loans.

The state's prosecutor said medallion prices were fraudulently set so high that drivers could not pay them off with their earnings from cab operation regulated by the city itself.

"These taxi medallions were marketed as a pathway to the American Dream, but instead became a trapdoor of despair for medallion owners harmed by the TLCs unlawful practices," James said in a statement.

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Many took out loans to pay for taxi medallions, counting on business that has instead nose-dived amid fierce competition. They are falling behind on loan Nowhere is the crisis more dire than in New York , which has the largest taxi fleet in the country. Medallions now sell for a fraction of the record .3

More than 950 drivers have filed for bankruptcy, and many more are still buried in overwhelming debt today. Mr. Hoque, who was featured in articles by The New York Times about the lending practices, bought his medallion in 2014 and signed a loan that required him to pay .7 million , even though

"The very government that was supposed to ensure fair practices in the marketplace engaged in a scheme that defrauded hundreds of medallion owners, leaving many with no choice but to work day and night to pay off their overpriced medallions."

New York's taxi industry has been upended by the arrival of ride-hailing platforms like Uber and Lyft.

More than 950 licensed taxi drivers have declared personal bankruptcy since 2016, according to a New York Times investigation of court records published last year.

Recent years have also seen a spate of suicides from cab drivers suffering under crushing debt.

The sum of $810 million corresponds to the city's revenues from medallion sales and resale tax, according to the attorney general, and must be paid within 30 days or James' office intends to sue, it said.

Contacted by AFP, New York City Hall did not immediately respond.

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