Press Release

March 10, 2014

Contact: Matt Anderson, 212-709-1691


Governor Andrew M. Cuomo’s administration today announced that an investigation by the Department of Financial Services (DFS) has exposed that the car-sharing service RelayRides put New Yorkers at risk through false advertising, unlicensed insurance activity, and other violations. RelayRides will pay a $200,000 to DFS as a result of the investigation.

“Our administration will not tolerate when companies break the law and jeopardize New Yorkers’ safety,” Governor Cuomo said. “We will continue to take an active role in protecting consumers by preventing false advertising and misleading business practices.”

Superintendent Lawsky said, “Companies operating in New York have a responsibility to make sure that they follow the law. It is simply unacceptable to sell New Yorkers a false bill of goods and disregard important consumer protections. We will continue to work with RelayRides on this matter.”

Last May, DFS directed RelayRides to cease operating in New York for its repeated violations of law. RelayRides represented that consumers would not be financially liable for accidents or thefts that occurred while using the service, which was not true. Under the agreement, RelayRides’ operations in New York will also remain suspended until they develop a program that puts in place appropriate consumer protections and complies with New York law.

RelayRides is a peer-to-peer car-sharing service that allows people to rent out their vehicles to third parties in exchange for a fee. The company sold insurance and adjusted insurance claims without being licensed by DFS, which is a violation of New York Insurance Law. Moreover, RelayRides misrepresented to New Yorkers that they would not be liable for out-of-pocket expenses in the event that the car is stolen or involved in an accident. In fact, DFS’s investigation uncovered that those claims were not true and that New Yorkers could be held personally liable for property damage, theft, bodily injury, or death that occurs during the rental.

In a typical RelayRides rental transaction, the company maintained a $1 million liability insurance policy for injury or damage to third parties. The policy was issued by Hudson Insurance Company – a New York insurer. RelayRides told vehicle owners that the Hudson liability policy would cover the owner, and that the owner’s own policy would not be involved if there was an accident while a person was renting the vehicle. However, an owner’s personal liability insurance policy provides coverage to any person who drives the vehicle with the owner’s permission. New York law does not permit an insurer to exclude coverage for a renter. As a result, an owner may have been personally liable for any accident that occurred while the vehicle was being rented.

Examples of misleading RelayRides advertising included: 

  • In one television commercial RelayRides aired in New York, a consumer renting out his car through RelayRides informs his neighbor that they are “covered in a million bucks worth of insurance.”
  • On its website, RelayRides promised that “if something unfortunate does happen while your car is being rented, your insurance policy should not be touched.”

Furthermore, RelayRides misrepresented to vehicle owners that their participation in the program would not result in their personal liability insurers cancelling or not renewing their personal liability insurance. However, standard New York liability policies do not permit the use of vehicles in commercial enterprises. Accordingly, RelayRides may have led vehicle owners to violate their liability insurance policies. RelayRides also failed to disclose to owners that renting out a personal vehicle could constitute a commercial use of that vehicle, potentially causing car owners to violate standard provisions of New York vehicle leasing and finance agreements.

In addition to the $200,000 penalty, RelayRides has also agreed that it will not conduct any business in New York until RelayRides submits a business plan that DFS determines is no longer inconsistent with New York State Insurance Law. RelayRides also agreed that DFS will have enhanced oversight over RelayRides should it commence operations in New York in the future: the company will submit monthly all of its advertisements and consumer disclosures to DFS for review of potential false and misleading statements.

DFS is continuing its investigation into Hudson Insurance Company, which issued the group liability policy sold to RelayRides’ consumers.

To read a copy of the consent order that RelayRides signed with DFS, please click here.