Seattle-based moving service startup Ghostruck faces up to $730,000 in penalties for illegally operating as a household good carrier without the required permits, Washington transportation regulators announced Thursday.
Much like Uber for moving, the app-based Ghostruck matches people with professional movers. It offers options to move an entire apartment, or just a large piece of furniture from Craigslist, for example. The company graduated from Seattle-based incubator 9Mile Labs in 2014 and expanded its service across the country in September 2015.
According to the Washington state Utilities and Transportation Commission (UTC), officials initially told Ghostruck in 2014 that it could not operate without the required permit. Ghostruck responded at the time to say it acted as a broker, not an actual mover, but admitted to occasionally using the subsidiary Empty Truck as a backup when no movers were available on its platform. Empty Truck lost its permit in December 2014 “because the company failed to provide proof of liability and property damage insurance,” UTC noted.
In the filing against Ghostruck, UTC staff identified 146 instances where the company worked as a residential mover without the proper permit. Additionally, the investigation found that Ghostruck illegally required customers to enter a contract directly with the company. Because the contracted mover Ghostruck uses may lack the proper permit, insurance and background checks for employees, this puts customers at risk, the UTC said.
“Ghostruck’s business practices not only harm consumers, but cause serious harm to the regulated household goods carriers who are trying to earn a living and follow the applicable laws and rules,” UTC staff said in the investigation report.
CEO Nathanael Nienaber told GeekWire that Ghostruck received little notice of the announcement.
“This complaint comes as a real surprise to us,” Nienaber said. “We are still reviewing it and will respond to the Utilities and Transportation Commission through our attorneys.”
Ghostruck operates in 13 markets, including Seattle, Portland and San Francisco, and describes itself as a company to “connect you with professional movers who are ready to get your stuff from A to B for a fixed price.” It raised $2.2 million in a seed funding led by Seattle’s Founders Co-op in 2014.
The debate over to how to classify the startup — a moving company vs. a tech-enabled broker — mirrors the one other companies like Uber are facing. A European court, for example, is currently considering whether Uber is can label itself as a technology company or if it should be defined as taxi service, and therefore subject to the same regulations. Airbnb and Lyft have faced similar problems.