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Austin's Department of Transportation Wants to Fine a Facebook Group

The police came looking for the CEO of Arcade City, a Craigslist style listing service for various services.
Photo Source: Arcade City/Facebook.

On late Friday afternoon, two Austin Transportation Department officers, accompanied by four APD police officers, sauntered around The Capitol Factory, an Austin coworking space. The officers were looking for Christopher David, CEO of the Craigslist-style listing service for various services, Arcade City. They did not find him.

Cheyenne Krause, Austin Department of Transportation press contact, told Motherboard: "Our Ground Transportation Regulation went to the offices of Arcade City to issue a citation to an individual who represented the company. The individual was not at the office. We got additional information and left. We have not issued a citation to the company as yet."


Arcade City's best known service, which the company markets but does not claim as its property, is a Facebook group called Arcade City Austin / Request A Ride, where people offer and request rides. It boasts 26,000 group members. The startup says its app, planned for August, will incorporate blockchain technology inspired by Bitcoin.

In May, Uber and Lyft left Austin amid a dispute with the city. That created an opportunity for Arcade City. David immediately moved the headquarters of Arcade City from New Hampshire to Austin.

As David, a controversial entrepreneur accused of abandoning numerous ventures, told Motherboard: "The city is currently freaking out about a Facebook group." However, rides are facilitated through the brand's name on Facebook, and Austin's city council enacted in June penalties for ridesharing services which failed to comply with city ordinances.

David learned officials sought him only after Joshua Baer, The Capital Factory CEO, tweeted a video of the officers.

Tip for Joshua BaerJuly 15, 2016

The officers were looking to cite Arcade City for operating a ridesharing service sans operating authority from the city—a Class C misdemeanor and up to $500 fine.

A spokesperson for the city said police were requested should the corporate representative—David is the only one located in Austin—decline to sign the citation. As David doesn't believe transportation network company (TNC) regulations apply to Arcade City, officials had reason to suspect he might refuse.


David affirmed: "We are not a TNC, and we don't want to be a TNC."

Currently, service providers and consumers in the Facebook group choose their own price. The city said if riders do not charge more than the federal reimbursement rate per mile—54 cents—the rules do not apply to them. The company suggests users discuss prices in terms of "donations."

Surprised by Friday's visit, David claims Arcade City has sent two letters to the mayor's office seeking clarification, one of which the company sent after the city impounded in June at least one Arcade City driver's vehicle.

"They had someone working with them who created a fake Facebook profile and made a ride request in the group," David said. "The rider lured a driver into the sting with two cop cars, who cited and impounded the driver's vehicle. That's the only other contact we've had with the city."

Police claim they impounded four Arcade City cars. David said they impounded only one—Cheri Hawes' car. Two guys requested a ride. When Hawes dropped them off, the police were waiting.

"I was very upset," Hawes said. "I asked him 'Please do not impound my car. I'm not going to be able to pay these fines, let alone my car getting out of impound and it is my source of income'." They cited her for not having operating authority as a ridesharing service and impounded her car.

Arcade City foresees its drivers handling licensing and compliance on their own. In this case, Arcade City users crowdfunded the driver's expenses.

David believes the city is angry Arcade City won't willingly accept the regulatory structure.

"Their rules don't apply to us, and we are happy to have that conversation, even if it's in court," he said. "The city, trying to intimidate us, has been underhanded and sneaky."