San Francisco is suing Turo Inc., a startup that lets people rent out their personal cars, for operating without permits at San Francisco International Airport.

The city is accusing Turo of failing to pay the fees required to operate legally at the airport, known as SFO, which sees about 53 million travelers a year. Other rental-car companies are required to register and pay fees to operate on or near its grounds.

“Turo’s practices contribute to congestion at SFO terminals, deprive SFO of funds needed for its operation and maintenance, and confer on Turo an unfair advantage over similarly situated businesses that operate lawfully and fairly,” City Attorney Dennis Herrera said Wednesday in a statement.

Turo, which claims about 4 million users in more than 5,000 cities in North America and Europe, appeals to travelers because they can find short-term car rentals that are cheaper than those of its corporate peers. Drivers also avoid waiting in lines to pick up their cars: Turo, which takes a 25 percent cut of each transaction, enables its users to meet and exchange keys.

Last year, the San-Francisco based startup raised funding from Daimler AG and South Korean conglomerate SK Holdings Co. that valued the company at about $700 million.

Turo considers itself an internet marketplace that shouldn’t pay the same taxes and fees required of traditional car rental companies. The American Car Rental Association, a lobbying group for companies including Enterprise Holdings Inc. and Hertz Global Holdings Inc., has been pushing lawmakers to eliminate what it sees as an unfair loophole.

“Turo executives seem to think the rules don’t apply to them,” Herrera said in the statement. “You don’t get special treatment just because you claim to be a disruptor. The internet does not provide a free pass from regulations,” Herrera said.

The company said San Francisco is simply acting in the interest of lobbyists. “It’s inappropriate to suggest that Turo should comply with rental-car permits,” said Michelle Fang, Turo’s general counsel. “This is not in the best interest of citizens who want to make some extra money renting their car. It’s in the best interest of Enterprise.”


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Photo Credit: The City of San Francisco is suing ridesharing company Turo for allegedly not having the appropriate permit to operate at San Francisco Airport. Bloomberg