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SF bay area car rental start-up faces lawsuit

Mihir Zaveri, Associated Press

In this photo taken Tuesday, June 11, 2013 Flightcar CEO Rujul Zaparde, poses outside a small rental shack on their lot in Burlingame, Calif. A San Francisco Bay area startup company founded by three teenage Ivy League dropouts is trying to change the airport car rental business. FlightCar rents out people's personal vehicles while they are traveling, giving them a share of the proceeds and free airport parking in exchange. But the company's rosy outlook does have some thorns. San Francisco's City Attorney has sued FlightCar, accusing it of unfair competition. (AP Photo/Eric Risberg)

BURLINGAME, Calif. (AP) -- Three teenagers are facing a lawsuit from the city of San Francisco alleging that their startup company that allows people to rent cars out to other airport travelers is not following airport regulations.

The lawsuit was filed in San Francisco Superior Court on May 31.

FlightCar launched in February and rents out people's cars while they are traveling. The company gives car owners a share of the proceeds, free airport parking and a car wash in exchange.

The city says the company needs to follow airport rules for rental car companies serving the airport, including 10 percent of gross profits to the airport and paying a $20 per rental transaction.

Other "sharing economy" companies such as Sidecar, Lyft, and Airbnb are facing similar conflicts around the country.