Three-year-old peer-to-peer car rental service Relay Rides has run into a rough ride in New York, accused by the state's Financial Services Department of "repeated false advertising and violations of insurance law."

The two sides present different takes on what's happened – a state official makes it sound like Relay Rides willfully misled consumers when it told them "that they would not be liable for out-of-pocket expenses in the event that their car was stolen or involved in an accident," because the company's insurance isn't approved by New York. Relay Rides, which operates nationwide, has said that it works to make sure it abides by state laws but learned from the Financial Services Department that there was "noncompliance with certain unique aspects of New York insurance law."

While the quarrel is sorted out, Relay Rides has said it will discontinue the service in New York but that any existing reservations will be honored.

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