Maryland Passes Bill Regulating Peer-to-Peer Rentals

Maryland will begin regulating the peer-to-peer (p2p) “private car rental” market with the passage of Senate Bill 743, the first comprehensive state law to require peer-to-peer car rental companies to comply with state tax, insurance, and safety laws and regulations. Enacted on May 26, the bill takes effect on July 1.

The bill was not endorsed by the American Car Rental Association (ACRA), which sought to have p2p carsharing defined similarly to traditional car rental, though the law applies almost all of the same regulatory and taxation requirements.

However, ACRA congratulated the Maryland House and Senate for taking the lead in applying state laws and regulations to p2p companies.

“ACRA has long sought parity between peer-to-peer carsharing companies … so that all entities that make motor vehicles available for rent to individuals for a profit are required to comply with the same federal and state insurance, safety, liability, and tax laws and regulations,” the association said in a statement.

The legislation mandates a sales tax rate of 8% for p2p carsharing companies. This rate will rise to 11.5% — the same rate paid by traditional car rental companies — in two years. (In Maryland, car rental companies can recoup the 3.5% sales tax on the purchase of a new car in fees charged to the renter.)

The new regulation also stipulates that p2p carsharing companies operating at airports are subjected to airport contracts and thus airport fees; that these companies must hold a limited lines license under Maryland’s laws to sell insurance regulated products; and that these companies comply with the national safety recall law that grounds vehicles under open recalls.

Turo, the nation’s largest peer-to-peer carsharing company, actively lobbied against the legislation. Turo claims that the service is a technology platform, not a rental company, and that ACRA members are attempting to stifle new competition. (Turo could not be reached for comment for this story.)

Turo is using this argument as it fights a lawsuit brought by the city of San Francisco alleging permit violations at San Francisco International Airport.

“ACRA welcomes innovative car rental services that meet the diverse and shifting demands of our industry’s millions of customers, but strongly supports the fundamental maxim that all companies who facilitate car rental services must comply with existing and future state and federal laws designed to ensure consumer safety, support state and local projects through lawful taxes and fees …” ACRA’s statement continues.

A similar bill regulating p2p carsharing companies in Illinois may hit the governor’s desk soon.

Related: Carsharing and Other Mobility Platforms: Legal Issues to Keep in Mind