New York ordered to pay $810 million to debt-ridden taxi drivers

State Attorney General of New York, on Thursday, demanded that all the debt-ridden cabbies should be paid a compensation $810 million, international media reported. The demands have reportedly emerged after the Attorney General accused the city of fraudulently inflating the value of the permits needed by cabbies to drive the famed yellow taxis.

Artificial inflation

Letitia James, the head prosecutor of the state of New York said that the investigation conducted by her office showed that the auction price of thousands of permits, known as medallions have been artificially inflated by millions of dollars between 2004 and 2017. Her office reportedly revealed that the Taxi and Limousine Commission (TLC) were aware of the inflammation in 2011. Yet the administrative bodies published ‘false and misleading medallion’ prices in a number of cases which caused the price of single Medallion at the auction to spike from $283,300 in 2004 to $965,000 in 2014.

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The TLC reportedly encouraged taxi drivers to use medallions as collateral for loans. The state’s prosecutors said that medallion prices were set so high that drivers could not pay them off with earnings from cab operations which were also regulated by the city. James in a public statement said, “These taxi medallions were marketed as a pathway to the American Dream, but instead became a trapdoor of despair for medallion owners harmed by the TLCs unlawful practices."

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"The very government that was supposed to ensure fair practices in the marketplace engaged in a scheme that defrauded hundreds of medallion owners, leaving many with no choice but to work day and night to pay off their overpriced medallions,” she added. According to international media reports, more than 950 licensed taxi drivers have declared personal bankruptcy since 2016. Adding to that, there have been multiple suicides by the cabbie community who are crushed under debt.

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