As phone apps for booking a taxi or a limo get more popular, drivers with rental cars are also jumping in to grab these calls, according to car rental industry sources.
These drivers are breaking the law; and this has prompted the Land Transport Authority (LTA) to act.
LTA officials met car rental companies and taxi operators last week to remind them of the rules, the second time it has done so in less than a year.
Other than taxis, only company-owned vehicles insured as limousines and driven by its employees are allowed under the law to ferry passengers for a fee.
This rule is to ensure passengers are covered by insurance should something go wrong during the journey.
A commuter, who declined to be named, posted on Facebook that she booked a cab through GrabTaxi last Monday, but a Ford car turned up. She had no qualms hopping in but she would advise children to decline, she said.
Regular cab commuter Lau Sau Kuen told The Straits Times she would steer clear of the new taxi alternatives for now. Ms Lau, a marketing professional in her 30s, said she would reconsider only if the authorities put in adequate measures to "secure public confidence" in the new services.
Meanwhile, the Singapore general manager of app GrabTaxi, Mr Lim Kell Jay, said its services were above board as his company ties up with "various limo companies" to provide an alternative to taxis.
GrabTaxi made its appearance in Singapore six months ago, while US-based Uber launched UberX - its closest alternative to taxis - last month.
GrabTaxi is a third-party taxi booking application which commuters can download onto their smartphone, and allows cabbies to bid for a booking job via a system that leverages Google Maps and location-based service Foursquare.
Barely a month after it arrived, GrabTaxi was instructed by the LTA to remove a tipping function from its app. It allowed commuters who wanted a cab urgently to offer to pay more to secure one.
On March 25, MyPaper reported that car owners can sign up with UberX to ferry commuters in their cars. Those who do not own cars could rent one from the company to do so.
Earlier this week, Uber regional manager Mike Brown said the report was inaccurate. "We and our partners have complete respect for the Road Traffic Act of Singapore, and we abide by the letter of the law."
Those caught flouting the law can be fined up to $3,000 or jailed for up to six months or both. The cars involved may also be impounded.
Singapore has about 17,000 rental cars, but only an estimated 500 to 1,000 are registered as limousines. Insurance for limos is three to four times that of a private car, while the premium for a taxi is about five times.
As it is difficult for commuters to distinguish legal limos from illegal ones, industry players are suggesting safeguards.
Mr Peter Cheong, president of the Vehicle Rental Association, advises people hiring a limo via mobile apps to ask for a written assurance from the rental or leasing company that the vehicle used is legal. The association has also advised its members not to rent their cars to those who intend to use them for ferrying commuters.
"Members should inform hirers, if possible in writing, that the vehicles are solely for their own use and are not to be sub-hired for reward," he said.
Meanwhile, taxi operators, some of whom also own rental and limo companies, are circumspect.
Prime Taxi managing director Neo Nam Heng said: "These new services will help ease peak-hour demand for taxis. But the consumer has to be well protected... the cars used have to be properly insured, and the drivers have to be staff of the company."
ComfortDelGro Corp, the largest taxi company with 16,000 cabs, said: "We are used to changing environments. We will continue to invest and innovate to stay ahead of the competition."
