Online ride-hailing platforms will be fined 100,000 yuan (US$15,900) if a car used by the app firms is found to be illegal, the Shanghai Transportation Commission said yesterday.

After Meituan Dianping drove into the city’s ride-hailing market last month, the number of illegal cars and drivers rose unexpectedly amid cutthroat competition.

Between April 5 and 13, traffic authorities nailed 668 cases of illegal cars — 433 from Didi Chuxing, 135 from Meituan and 78 from other platforms.

Both Didi and Meituanhave been trying to lure drivers with tempting offers.

A driversurnamedLu said that from March 22, the second day afterMeituanentered Shanghai,DidiChuxing offered drivers a 20-yuan bonus for every order they completed during rush hours.

Drivers just had to open an account on the platforms and started to pick up passengers without having the proper papers.

Shanghai regulation insists that all ride-hailing firms operating in the city must have cars with local plates and drivers with local hukou(permanent residency).

There are 13 registered ride-hailing firms which have obtained certificates issued by the traffic authority to run their business. However,DidiChuxing, the city’s largest ride-hailing provider, is not one of them.

“Didi has applied for the certificate for a long time,” saidZhouYiqunfrom the city’s vehicle management authority. “But they have not cleared out all the out-of-station drivers and cars.”

The city has also asked the app firms to link the data of their cars and drivers to a supervisory database run by Shanghai traffic authorities and police.

“The data showed that many drivers and cars fromDidiare not from Shanghai,” said Zhou, “which is why we cannot grantDidia certificate.”

“There is nothing we can do but fine the company,”Zhoutold Shanghai Daily.

Once busted, the illegal driver is fined 10,000 yuan and his driving license suspended for three months. The platform is fined 100,000 yuan.

YangXiaoxi, director of the city’s traffic authority, saidDidiChuxingis a national company with headquarters in Beijing. Shanghai cannot ban Didifrom the city. “But we are considering listingDidias an discreditable company,” Yang said.

DidiChuxing claims that due to privacy policies it is difficult for the company to verify the residency status of the drivers.

WangMingzefromDidisaid the company has been making efforts to weed out illegal drivers.

“We do offline checks to make sure the actual plates of the cars match with the ones uploaded by the drivers into the system,” said Wang. “We have also cancelled the rewards we offered to the drivers to end the competition between companies.”

But he did not comment how the company could confirm that all their drivers were locals.

A driver surnamedLu, who hails fromAnhuiProvince, told Shanghai Daily that more than half of the drivers who use Didi’s service are from outside the city. “This is not a very profitable job considering we drive more than 12 hours a day,” Lu said. “I don’t think many Shanghai locals are willing to do this.”