The California Public Utilities Commission (CPUC) recently ordered the ride-sharing services Lyft, Uber and Sidecar to cease its carpooling features, CNET reported.
The agency had already sent warning letters to the CEOs of the three companies informing them that their companies have violated laws in California.
The three companies launched their carpool services last month. The UberPool, Lyft Line and Sidecar's Shared Rides lets strangers from various locations but heading to the same direction ride in the same car, according to PC World.
Each passenger is charged an individual fare. According to California law, this is illegal because carpool operators should charge the entire group according to mileage or duration of the travel.
In addition, companies that wish to launch a carpool feature must first communicate with the CPUC. They also have to submit a permit request to the Transportation Network Company before offering a new service.
Based on CPUC's letter to Uber CEO Travis Kalanick, the company has not done both despite launching the beta version of UberPool in August of this year.
"Uber has not yet approached the Commission regarding the UberPool service, not submitted a request to modify its existing permit as a Transportation Network Company (TNC) to provide service under a different business model," CPUC wrote.
"However, based on media reports and Uber's own blog site content, Uber's proposed transportation service violates existing California law, specifically Public Utilities (PU) Code Section 5401," the agency continued.
As for Lyft and Sidecar, representatives from the two noted that upon receiving the letters from the CPUC, the companies are currently reviewing their option as to how they will be able to legally operate their carpool services, Tech Crunch reported.
"We welcome the opportunity to discuss this new form of shared transit with President Peevey and CPUC to ensure that residents continue to have access to this innovative and sustainable transportation option," a spokesperson from Lyft said.