Turo is, in theory, brilliant. If you’re not using your car, you can rent it out to other people. Make some money on the side. If you own two cars, that’s even better. You can make twice the money, in theory. But a lot of people in Chicago are mad at one man, who rented an astounding 38 cars on Turo, and parked a whole bunch of them on one block.
Chicagoan Michael Oates joined Turo in July of 2015, according to his Turo profile, and since then has amassed a fleet of Toyotas, Volkswagens, and Fords, available for as little as $20 a day for a 2008 Toyota Yaris, ranging up to $99 a day for a Volkswagen Jetta. It’s unclear how much money he’s been making from the service, but that’s a little beside the point.
That’s because back in December 2017, his neighbors noticed that the fleet was taking up a large number of the curbside parking spaces in the neighborhood. Tired of searching for a parking spot for their personal vehicles while Oates’ rental fleet sat waiting for customers, they complained to their local city Alderman, James Cappleman.
Cappelman sounded pretty mad about the whole thing in an interview with Block Club Chicago’s Daily Line blog:
Cappleman told The Daily Line that his office has received complaint after complaint about Oates’ cars, and said parking has become the No. 1 issue in his ward.
“This person ranks far and above having more cars than anyone,” Cappleman said. “Every good thing that surfaces, someone comes up and takes it to the extreme. [Oates] took it to the extreme in the 46th Ward and the residents are furious. So am I.”
Cappleman, in turn, forwarded their concerns over to Chicago’s Department of Business Affairs and Consumer Protection, or BACP. The BACP took a look at Oates’ fleet, and concluded that no, this wasn’t just a local denizen looking to make some money on the side.
And while parking 38 cars on the street wasn’t a violation of any regulation, there was another, pretty glaring violation: Oates was running a rental car operation from their apartment without a license, the BACP alleged, which is illegal in Chicago, according to the Cease and Desist letter sent to Oates by the BACP, and which was provided to Jalopnik by Cappleman’s office.
(Oates has not responded to multiple messages from Jalopnik.)
Oates was in violation of Chapter 4-4 of the Municipal Code of the City of Chicago as of December 8th, 2017, the BACP wrote, and Oates was ordered to cease and desist conducting the business or occupation of operating a car rental service business out of a residential location for which a Limited Business license, Code 1010 is required.”
“The Superintendent of Police is hereby directed to arrest any and all agents, and employees of Michael Anthony Oates, if found to be engaging in the business or occupation of operating a car rental service business out of a residential location,” with the required license, the letter added.
It’s unclear if Oates ever obtained the license demanded by the city, and Oates did not respond to messages sent over Facebook. His Turo profile remains up, and his 38 cars remain available to rent. (They’re pretty pedestrian, mostly Fords and Volkswagens and Toyotas.)
The city of Chicago’s legal department eventually told Cappleman that the situation existed in a legal gray zone, the Daily Line reported, and that:
lawmakers in Springfield would first have to pass a bill regulating the car-sharing industry before they could take action against Oates.
The parking situation shouldn’t even be a problem anymore, however, Michelle Peacock, the head of government relations with Turo told me over the phone. Oates moved his cars from the block immediately, putting them in private parking lots, Peacock said, and just two days ago, representatives from Turo went to Oates’ neighborhood to confirm that “not a single person associated with Turo has a car on that street.”
But at least one email sent to Tressa Feher, Cappleman’s Chief of Staff, dating to September 2018, allegedly shows Oates’ cars still parked on the block. “A couple more cars for you,” it begins:
Five cars were parked in front of the complainant’s building, the email alleges, and attached are photos of two cars. The make, model, paint color, and license plate of one of the cars does match a Volkswagen Passat offered by Oates on Turo.
The cars were only moved for about two weeks, Feher told Jalopnik over the phone.
“He may have put some cars in a lot, but not all, and he moves them around frequently,” Feher said. Oates moved his cars to a private parking lot at one point, Feher added, but was asked to leave that lot after the parking lot manager noticed that he had placed lockboxes containing the keys to the cars on the lot’s gate.
“I don’t think the cars are there now, but this issue has been going on for a long time,” she said.
And Oates has been releasing videos responding to Cappleman:
If you don’t want to sit through a 10:44 video tour of Oates’ neighborhood, his response can pretty much be boiled down to this: there’s plenty of available parking in the neighborhood, and also that a lot of people park in the neighborhood without the right parking permits, whereas all his cars have the right parking permits, so that’s a bigger issue.
“God damn smear campaigns,” Oates says at one point. And Turo’s messaging lines up with Oates, too. “Half the cars on that street are not properly zoned with a sticker. If the Alderman is so worried about it, he should worry about that rather than his neighbor,” Peacock said.
But the whole fight about parking in one Chicago neighborhood aside, there is a huge question that no one seems to be able to answer. At what point is it one person renting out their car to make a few bucks using Turo, and at what point are they running a rental car business? And does Turo have any plans to limit the number of cars its hosts could offer?
Peacock said that Turo hadn’t had too many internal discussions about the question, because the company didn’t feel it was a problem. At a certain point, it just becomes cheaper to open up one’s own full-fledged rental car agency, she said, rather than using Turo’s platform and all that it entails. So rental fleets on Turo, by and large, stay small.
Nearly 97 percent of Turo’s hosts have three cars or fewer listed on the site, Peacock said.
“Given that 97 person of our host community doesn’t fall under that, it hasn’t come up,” Peacock said. “And when it’s come up in the past, when they come to be the size of Michael [Oates], is they typically create a commercial insurance policy, and for that we have a commercial host policy, where they can use Turo as a lead generation tool.”
“And that’s why people like Michael are outliers in the community,” she added.
But Turo has grown by a lot, and fast. Nearly 350,000 vehicles are available to rent on the site, according to Turo’s own estimates. But if it can be assumed for a minute that the average host lists two cars (Turo wouldn’t tell me the number of hosts they had, only the number of vehicles), that still means that more than 5,000 people are listing more than three cars for rent on the site.
So while issues like Oates’ fleet might be small in proportion to the rest of Turo’s user base, thousands of people running large rental fleets over Turo is still a lot of people. And if Turo continues to grow, it stands to reason, so will the particular problem of this legal gray zone.
After all, established rental companies must abide by a vast swath of legal rules, regulations, and laws. People on Turo, even with large fleets like Oates, by and large do not. So Turo, in effect, becomes a legal loophole. It could, the thinking goes, potentially bestow much of the benefits of running a full-fledged rental car business, without forcing said business to abide by the regulations that are supposed to govern it.
It made no sense for truly large rental fleets to exist on Turo either, Peacock said, because of the extra taxes Turo hosts pay on their cars compared to true rental car companies, compared to tax breaks that large rental companies get. At a certain point it just made more financial sense to move off the Turo platform, she added, though she did not specify at which point that was.
Which brings us back to the original response from the city of Chicago’s legal department. Oates’ situation was a legal gray area, and it would be up to state lawmakers in Illinois’ capital, Springfield, to remedy the situation.
Which they tried to do. A bill catchily titled SB2641 aimed to close the legal loophole, if a bit ham-fistedly. To solve the problem of one person parking 38 cars on their block, it would make it so that everyone who rented out their cars on sites like Turo or otherwise would now be governed like full-fledged rental car companies. One person renting out one car would now be subject to the same set of rules as rental car giants like Enterprise, or Hertz.
SB2641 sailed through the Illinois state senate and the state house of representatives. It appeared as if would become the law of the land, and that would be that. Turo would, effectively, be shut down in Illinois. Which was exactly the point, Peacock alleged.
“Look at what Enterprise has done in the last couple of years to use their financial and political might to write amendments or given testimony in 14 separate states, to eliminate their competition,” Peacock said. “And Turo is their competition.”
But it’s not that Turo doesn’t want any regulations, she added.
“We are a different industry, and we are willing and have proven that we are willing to be regulated to our industry, but there are concerns that need to be addressed on behalf of our customers,” she said.
Enterprise did not respond to a request for comment.
And it appears that Illinois Governor Bruce Rauner, a Republican, agreed with Turo’s concerns. He vetoed SB2641 because it was too broad, as the Daily Line noted:
Rauner’s official veto message objected to the “sweeping” nature of the legislation, and contained dozens of specific recommendations for change in order to let car-sharing businesses like Turo thrive in Illinois.
“Oversight of this new industry is important to protect consumers; however, we should be careful not to unintentionally smother its growth before it has a chance to get off the ground,” Rauner’s veto message said.
Though it’s not the end of the fight, as the legislative battle continues. Even though Rauner vetoed SB2641, there is a constitutional provision for a legislative override of that veto, as Greg Hinz of Crain’s Chicago Business noted:
Lawmakers now will decide who wins. Bill advocates appear to have a strong hand to play in the House, which approved the bill in the spring with 78 “aye” votes (71 are needed for an override), but advocates will need to pick up a couple of votes in the Senate if they are to win.
Cappleman, for what it’s worth, doesn’t want to eliminate Turo altogether. “Alderman Cappleman agrees that Turo can be a really helpful app for people like us that don’t own cars,” Feher said in an email. “But this guy has been operating like a business, not someone that wants to share his personal car and he has been really upsetting his neighbors. Both Michael and Turo could have handled this better.”
But even if SB2641 does make it over the governor’s veto, the question of “what makes a rental car company, a rental car company?” still exists.
Are you a rental car company if you rent out one car? Two cars? Ten cars? What about 38 cars?