[noxryan]

It sounds like they we're trying to use exception (c) of FAR 61.113[1]

"A private pilot may not pay less than the pro rata share of the operating expenses of a flight with passengers, provided the expenses involve only fuel, oil, airport expenditures, or rental fees."

But anyway, I completely agree with you, any private pilot who took part in this service is asking for their certificate to be suspended. This is definitely outside the scope of that exception and is asking for problems by allowing private pilots to take part.

Edit: Just noticed that their FAQ still claim that this is completely okay for a private pilot to use [2]. This should be removed.

[1] http://www.ecfr.gov/cgi-bin/text-idx?SID=69df887b632147859ca...

[2] https://flytenow.com/faq#pilot