Lyft has agreed to a settlement with the Federal Trade Commission over accusations that it deceived drivers about how much money they could make driving for the company.
The complaint accuses Lyft of trying to entice drivers to its service by inflating how much they could make. Rather than showing what an average driver could reasonably expect to make in a given market, Lyft used data from the top earners, while also including tips in the advertised wage.
Ads for Lyft advertised that drivers around the country could make specific hourly amounts. For example, potential drivers in Atlanta were offered up to $33 an hour, potential drivers in Portland were offered $41 an hour and potential drivers in Los Angeles were offered up to $43 an hour. Lyft failed to disclose that these amounts did not represent the income an average driver could expect to earn, but instead were based on the earnings of the top one-fifth of drivers. The complaint notes that these figures overinflated the actual earnings achieved by most drivers by as much as 30%.
In addition, the complaint notes that the hourly earnings claims Lyft made in its ads included tips paid by passengers, even though many drivers would assume any tips they received would be in addition to an hourly pay figure.
Similarly, Lyft promised “earnings guarantees,” but failed to clearly outline what those guarantees included.
In its advertisements, Lyft also tried to entice drivers by touting “earnings guarantees,” which supposedly guaranteed that drivers would be paid a set amount if they completed a specific number of rides in a certain time. For example, one guarantee promised drivers they would make $975 if they completed 45 rides in a weekend. But these guarantees did not clearly disclose that drivers were only paid the difference between what they actually earned, and Lyft’s advertised guaranteed amount. Drivers complained to the company in large numbers that they believed the amount Lyft guaranteed would be paid as a bonus on top of whatever pay they received for completing the assigned number of rides.
In response to the FTC’s action, Lyft will change its advertising to reflect the earnings a driver could reasonably expect to make. The company has also agreed to a $2.1 million civil penalty, and will back up all claims regarding pay with evidence.
“It is illegal to lure workers with misleading claims about how much they will earn on the job,” said FTC Chair Lina M. Khan. “The FTC will keep using all its tools to hold businesses accountable when they violate the law and exploit American workers.”