As NYC taxi drivers continue to face crippling amounts of debt, the city released the results of an investigation that further confirm predatory practices in the industry and proposes new rules to mitigate them.
“If you’re a cab driver in New York City, know we’re in your corner and that this is just a start,” Mayor Bill de Blasio said in a statement about the recently released report.
A recent two-part New York Times investigation found that industry leaders artificially increased the price of taxi medallions, leading to a collapse in 2014, and the value of medallions to dramatically decrease. This also led 950 medallion owners to file for bankruptcy and thousands to struggle financially.
The city’s investigation says that 51 percent of drivers are “struggling to pay their monthly bills” and 26 percent are considering bankruptcy.
The average median debt for taxi drivers surveyed for the city investigation is approximately $500,000, while the average hourly wage rate for taxi drivers in the state is $16.57/hour, according to the Bureau of Labor Statistics.
The Times investigation found that among bankers, investors, and debt collectors; brokers who assisted in the buying or selling of taxi medallions made millions in profits. This prompted the de Blasio administration to conduct an investigation into their business practices.
“Although brokers were heavily involved in helping their clients secure lending for the purchase of a medallion, very few reported that their broker helped them understand the terms of the loans,” the report reads.
The 45-day investigation by the Taxi Limousine Commission (TLC), the Department of Finance (DOF), and the Department of Consumer and Worker Protection (DCWP), looked into TLC-licensed businesses that act as brokers to facilitate purchases of taxi medallions. According to the report, 90 percent of drivers surveyed said they used a broker to purchase their medallions.
The report, released on Monday morning, found that even though the TLC requires brokers to summarize the loan and purchase agreement terms to lenders, the information provided to taxi drivers is “often confusing” and not provided in any languages other than English, though over 95 percent of taxi drivers are immigrants. The investigation also found that brokers don’t use written broker agreements consistently.
As a result, the city made several recommendations, including:
- Amending TLC rules to make sure that “brokers act in the interests of their clients,” regularly report their interests in businesses serving TLC licensees, and submit written agreements to TLC for all the services provided as brokers.
- Requiring brokers to provide an easy-to-read loan disclosure statement for their clients—translated into the city’s top 10 non-English languages—summarizing the total amount borrowed, monthly payments and interest rates, cost to pay off the loan, and the amount of time required to pay it off.
- Forming a new Business Practices Accountability Unit under the TLC to make sure brokers follow the new rules.
- Creating a list of enforcement actions against brokers on the TLC website as well as “plain language medallion transfer guide” to allow for buying or selling a medallion without requiring a broker’s services.
- Establishing a Driver’s Assistance Center, offering mental health resources and access to financial advocacy.
But advocates for city taxi drivers say these recommendations are not enough.
“The mayor’s recommendations don’t include debt forgiveness for a workforce facing an economic crisis that has already pushed three owner-drivers to suicide, and thousands to bankruptcy,” Bhairavi Desai, executive director of the New York Taxi Workers Alliance (NYTWA), said in a statement.
Desai added that debt forgiveness for struggling taxi drivers would cost between $1.8 billion and $2.7 billion—and not $13 billion as City Hall has reportedly estimated. The city recently agreed on waiving $10 million in fees owed by medallion owners and a group of City Council members and the city’s Comptroller have spoken in favor of a partial bailout.