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Is it illegal for a cab to refuse a fare in NYC?

Yes

So why do we hear stories like the parent comment of people being refused a fare, or have to go through this elaborate theatre of getting the begrudging cab driver to take them to their desired destination

Unless the authorities don't give that much of a crap when people report it? Seems like a failure of the law enforcement tbh. Although granted, being refused a cab fare is hardly top priority in the grand scheme of things

Because not everyone follows the law. And not everyone reports it when it happens. If you're trying to get home and the first cabbie says no - and you don't insist - you'll probably forget about it once you get in another cab taking you home.

Reporting, getting into an argument with someone who has your safety in their hands, getting authorities to confirm… That takes a lot of time when you are late for diner.

And after that, you forgot the cab plate number, or even the driver's face.

Behavioral details like that matter a lot for web or mobile-based services.

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