Uber forced to halt service in East Hampton after new rule

New Yorkers looking to hail an Uber cab in East Hampton will likely be out of luck this summer.

The wealthy summer enclave has effectively banned the ride-sharing service, by instituting a new ordinance that requires every individual driver to register a business license in their own name—and maintain a physical business presence in East Hampton. It's a requirement that Uber says is impossible for its partners to meet.

In an e-mail to customers Friday, Uber said: "As a result riders like you will be unable to get reliable, safe rides in any part of East Hampton out to Montauk—effective immediately."

A Uber driver in New York City.
Scott Mlyn | CNBC
A Uber driver in New York City.

Uber said it has obtained local licenses from the town for the past several summers. Now, the company is urging the public to contact the town's supervisor Larry Cantwell to speak out against the rule.

"We need your help to bring Uber back. Make your voice heard and contact town supervisor Cantwell today," Uber said in the email, which included a hyperlink with Cantwell's contact information.

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In the two hours after Uber made its announcement, Cantwell's office received more than 100 phone calls and 600 emails about the new town code, according to a local news publication.

"Some are from East Hampton, some are from afar: Seattle, Boston and elsewhere," Cantwell told The South Hampton Press. "Most of them are supportive of Uber, but not all of them. We understand this is part of their strategy, and that's fine."

Cantwell did not respond to CNBC's request for comment.

East Hampton, located about about two hours away from Manhattan, is a popular summer vacation destination, well known for its upscale party scene. It's also known for its intoxicated revelers, many of which almost always need a ride home.

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Last week, police made 11 alcohol-related arrests in East Hampton, as party goers flocked to the town to celebrate Memorial Day, according to the East Hampton Star.

"There is an unquestionable need and demand for Uber in the Hamptons because taxi service has been historically unreliable," Uber spokesperson Matt Wing told CNBC. "Unfortunately the East Hampton Town Supervisor and Town Board have changed the rules, banning Uber from the town and denying their constituents access to our service."

Uber has its own interestes at stake. The need for reliable transportation in the area has reportedly made it easy for drivers to demand higher rates there. In March, the New York Post reported Uber drivers "could make double fares" in the Hamptons, saying minimum fares were a lofty $25.

The seasonal influx of cabbies was apparently overwhelming for the coastal town. "At one time, there were over 700 cabs that were licensed to do business in East Hampton. The law is intended to bring order to that situation," Cantwell said in a statement to The Southampton Press.