Is it true that Lyft drivers can ban passengers?

Sort of. 3-star rating can block riders.

Lyft drivers cannot directly ban passengers from using Lyft.  However, they can file a complaint with Lyft, which in turn can ban the passenger.  These are, of course, handled on a case-by-case basis.

There is also another rule in place  When a driver rates a passenger 3 stars or below, he or she will never be matched up with that user (passenger) again.

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Uber Driver, CEO of TaxiFareFinder and Unleashed, LLC