Uber should play by the rules, critics say

The Uber argument
The Uber argument

Transportation service Uber could raise a potential security risk for passengers because they don't abide by the same rules as cabs, Robert Werth, president of the Taxicab, Limousine and Paratransit Association, told CNBC Monday.

The company, which uses smartphone applications that allow passengers to find drivers, has come under fire recently by several states issuing warnings about the risks of such services. Last week the Virginia Department of Motor Vehicles sent a cease and desist letter to Uber and fellow ridesharing company, Lyft, ordering them to halt operations in the state.

"Their drivers are not going through a licensing process that requires you to have FBI fingerprinted analysis," Werth said in an interview with "Closing Bell."

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Last week, Uber announced it raised $1.2 billion in new funding. That brings the company's valuation to $18.2 billion.

"It's pretty remarkable we're in the billions in terms of how big the company is and what kind of activity we're doing on a yearly basis," Uber CEO Travis Kalanick told "Closing Bell" Friday.

"Folks want to be able to push a button and get a ride very quickly, and if you can make the economics work so that it's actually more economical to push a button and get a ride than it is to own a car, then a lot of people are going to do it."

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Taxicabs wait for fares in front of the St. Francis Hotel in San Francisco, Calif.
Getty Images

In San Francisco, cab companies are predicting Uber could potentially drive them out of business.

"What's going to happen is companies like mine and others are going to move away from a regulated business model to a deregulated one," said Hansu Kim, owner and president of the DeSoto Cab Company in San Francisco, which operates about 200 cabs and is the oldest and largest cab company in the city.

"The problem with Uber is Uber is not playing by the same rules that are applied to taxi cab companies."

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Kim said taxi cabs need to have commercial insured licensed drivers behind the wheel, and the types of vehicles need to be inspected and regulated.

According to Kim, Uber doesn't have to follow these rules, which makes competing with Uber very difficult. "I would support Uber all day long if they played by the rules like the rest of the industry does."

—By CNBC's Laura Petti