Probably the former based on conversations I've had with various drivers. It's a bit more common than people first let on. From the drivers I spoke to that have cut out Uber/Lyft as middlemen, typically they started out on the platform and established a rapport with a customer (almost always a business traveler who has regularly scheduled trips). Customer and rider exchange info and then it's a regularly scheduled under-the-table operation where the circumstances of the ride are incredibly easy to conceal from insurance and even the tax-man.