San Francisco-based HiGear, a peer-to-peer car-sharing service focused on luxury vehicles, is shutting down due to theft incidents involving its members’ cars. According to CEO Ali Moiz, the company will send out an email tomorrow to its members with a full explanation. The news may come as a shock to some, given that HiGear was seemingly doing so well in recent months. The company had expanded to L.A. in November, and was planning expansions to additional markets, including Portland and San Diego, by year-end.
Unlike other car-sharing services, HiGear specialized in “high-end” auto brands only, like Mercedes, BMW, Audi, Aston Martin, Lamborghini and Tesla. It provided comprehensive liability and collision insurance and performed member screening, which included driving record checks and credit checks. It also collected a security deposit in order to “encourage safe and fair use of members’ cars.” In additional to the rental fee ($125-600, depending on the car), drivers would pay $20-40 per day in rental insurance.
These protections proved to be insufficient, however, when HiGear was targeted by a criminal ring. The group stole four cars totaling $400,000. The criminals used stolen identities to bypass HiGear’s security checks, and stolen credit cards to pay HiGear’s fees. Police have since recovered some of the cars and insurance is now processing claims for the rest, but the incident has forced HiGear to realize that this sort of thing may not be preventable in the future. A month after the incidents occurred, the company made the tough decision to suspend operations and shut the business down. Full details will be sent out to members tomorrow via the following email (below):
I am writing to you today with some sad news. After a great run the past few months, we have decided to shut HiGear down and discontinue the service. I understand this may come as a surprise since the service seemed to be doing so well. HiGear, in the short space of 6 months since launch, got over 5000 members and 300 luxury cars listed. We processed hundreds of rentals each month and got covered by Techcrunch, the Wall Street Journal and other mainstream press. However an incident last month showed us the inherent risk with the peer-to-peer nature of our service.
Last month 4 cars were stolen on HiGear by a criminal ring. The total value of these cars was around $300,000. While our insurance is processing the claims for reimbursement, and the police have since recovered some of these cars, this incident involved sophisticated criminals using identity theft, stolen credit cards and stolen IDs to bypass all the background checks that we had put in place. This incident exposed us to the worst-case risks inherent in our service. Even by improving security and processes, we are not completely sure we can prevent an incident of this sort from happening again given the peer-to-peer nature of our service. It is difficult to eliminate identity fraud completely on the internet. Companies like Amazon, Google and Ebay lose millions each year because of it. However when you compound that with the sum of large losses (the average HiGear car is worth $70,000), it creates an untenable situation.
New reservations were suspended on HiGear immediately after this incident. We spent a few weeks trying to see if situations like these could be prevented in the future affordably. Unfortunately, the result of our investigations has been that in order to best protect car owners and their cars, HiGear needs to be shut down to prevent organized crime from taking advantage of the service again.
We do not believe other peer-to-peer services that focus on economy, everyday cars are at the same level of risk of theft. Criminals get a better return for their efforts with more expensive vehicles. At this time we believe that Getaround, RelayRides and other similar P2P services offer adequate safety procedures and protection. We encourage you to try the other services if you would like to continue renting out your car.
In the meantime, feel free to browse through the HiGear cars and girls while the service is still available. Save your favorite as your desktop wallpaper. We’ll miss HiGear as much as you. It was a pleasure to provide this service for our members, and to bring happiness to thousands of people by getting them into the car of their dreams.
Feel free to write to myself or Murti personally with any questions or comments.
Ali & Murti
After its beta launch in August, HiGear announced in November it had logged over 25,000 hours of car shares. Over 2,000 of those hours were in L.A., where it had just arrived, indicating potential for further growth. At the time, Moiz said that if the current growth rate continued, he expected to see 40,000 to 50,000 hours over the next 90 days.