'Uber for kids' Shuddle trips on Calif. child care rules

SAN FRANCISCO — Is a car-hailing company for kids a limo operator or a nanny service?

That's the question facing Bay Area startup Shuddle and the California Public Utilities Commission, who are at legal loggerheads over how a ride-hailing company serving unaccompanied minors should be regulated.

Back in November, the CPUC issued Shuddle a cease and desist letter noting that the company had not yet registered with TrustLine, a state agency that uses fingerprints to run background checks on those working in the child care field.

CPUC officials tell USA TODAY that Shuddle remains in non-compliance, which could lead to the commission ordering the company to "stop operating and take steps to make sure that happens, such as petitioning the court to shut off their phone service," CPUC director of news and information Terrie Prosper said. "Safety is our top priority."

But late Tuesday, Shuddle CEO Nick Allen and Shuddle's attorney Tara Kaushik told USA TODAY that last week the company began the process of running its hundreds of drivers through TrustLine. That said, Allen adds that "we believe our screening process is comprehensive, safer and faster."

Shuddle currently performs its own background checks by running driver's licenses and Social Security numbers through national databases. The company also interviews applicants, most of whom have child care backgrounds.

Allen adds that Shuddle's screening currently "exceeds current requirements, including TrustLine, which is outdated, approves applicants to the registry prior to background check completion, and is limited to the state of California."

Shuddle has retained the legal firm of Holland & Knight to press its case with the CPUC.

The language in the cease and desist letter is predictably terse. In it, supervising investigator Brian Kahrs writes that Shuddle has engaged in activities that … "mislead the Commission or its staff by an artifice or false statement of fact or law."

But the fact that no sanctioning actions have been taken in the seven months since it was issued could indicate that the commission is still sorting out best practices when it comes to businesses that simply didn't exist a few years ago.

Shuddle, which has raised $12 million since launching last fall, charges a $9 a month membership fee and has prices that are roughly 15% higher than Uber. The premium allows parents to book and monitor rides for pre-teens and teens. The company says only 5% of driver applicants are contracted by Shuddle.

A new southern California competitor, HopSkipDrive, does use TrustLine to vet its contract drivers, who number about 100. It also searches county courthouse records based on the last seven years of residence.

"We are fans of TrustLine, which is considered the gold standard of background checks," co-founder and COO Carolyn Yashari Becher says. "We see our drivers as caregivers first."

Becher says that many HopSkipDrive applicants "self-select out after seeing our requirements, which include fingerprinting, five years of child care experience and owning a car that is 2005 or newer."

Adds CEO Joanna McFarland: "The metric is simply is the service safe enough for our own kids. Is it more expensive? Yes. Is it the right thing to do? Yes."

TrustLine charges roughly $130 per check and typically takes a few weeks to return results. Allen says it's not so much the price or delay that make him question the use of TrustLine, but rather the fact that the service isn't state of the art.

Allen notes specifically that TrustLine's search of countywide databases is limited to California, while Shuddle engages researchers to parse county records anywhere the applicant has lived over the past seven years.

"If TrustLine was the best, that's the service we'd be going with, but it's not," Allen says. "My responsibility is to do the safest thing for our passengers."

TrustLine program manager Cindy Mall, who works for the non-profit California Childcare Resource and Referral Network, counters that TrustLine covers a broad swath of possible offenses.

These include checks for in-state Department of Justice arrest records, FBI records, revoked K-12 teaching credentials and the results of child abuse investigations.

"We have an excellent grasp of events in California as a lot of information nationally," says Mall, who acknowledges that the TrustLine process can be slow. "But what's a few weeks if you're dealing with protecting a child?"

In the end, every party in this debate agrees that the welfare of young passengers is of paramount importance.

"We are not opposed to legislation around the transporting of minors," says Allen, who notes that his company installs monitoring devices in driver cars that tell Shuddle staff how they're accelerating, braking and even if they're texting while driving. "Everyone here is coming from the same place."