Uber did not admit to any of the alleged violations.
Uber agreed to pay $20 million to settle a Federal Trade Commission suit alleging that the company misled drivers on how much they could earn.
As part of the settlement, the FTC will issue refunds to Uber drivers. The agency has yet to determine how it will allocate the funds but has ordered Uber to help with the process as part of the settlement.
“We’re pleased to have reached an agreement with the FTC,” an Uber spokesperson said in a statement. “We’ve made many improvements to the driver experience over the last year and will continue to focus on ensuring that Uber is the best option for anyone looking to earn money on their own schedule.”
Uber has also agreed not make any false claims going forward about how much drivers can make or the terms and conditions of financing or leasing a vehicle. Importantly, by settling, Uber did not admit to any of the FTC’s allegations.
In the suit, the FTC alleged — among other things — that in spite of Uber CEO Travis Kalanick’s claims in May 2014 that the average New York City Uber driver made $90,000, the median driver earnings were actually $29,000 less than that between May 2013 and May 2014.
The suit further alleged that in 18 markets, Uber advertised hourly rates that, at most, fewer than 30 percent of drivers actually earned. For example, Uber advertised that drivers in Atlanta could make $16 an hour, but the FTC found that fewer than 30 percent of drivers made that. In Boston, Minneapolis and Philadelphia fewer than 10 percent of drivers made what Uber claimed they would.
The FTC also took Uber to task for misrepresenting its leasing program, called the Vehicle Solutions Program. Specifically, the FTC said that the ride-hail company advertised the “low cost” of the program, claiming that it would cost $119 a week or $140 a week to lease a car from participating auto companies.
However, the FTC alleged that not only did Uber not monitor how much drivers were paying through the program but also that it cost more than $200 a week on average.
The company also claimed the program allows for unlimited mileage when in fact Uber drivers leasing from these companies were limited to up to 40,000 miles a year. Drivers who tried to end their lease early were charged 25 cents for every extra mile.
The FTC would not go into further detail about when discussions with Uber about the suit began or what brought the agency’s attention to the issue of driver pay. Uber is required to pay the sum within seven days from the filing date.
This isn’t the first instance of the ride-hail behemoth settling a case for false advertising. In February 2016, the company settled a pair of lawsuits that accused it of misleading the public by claiming it was the “safest ride on the road.” As part of the settlement, Uber agreed to stop calling the $1 to $2 fee added to each ride a “safe ride fee” and instead refer to it as a booking fee. The company also agreed to stop claiming its background checks were “industry leading” or the “gold standard.”
Here is the full complaint:
Here is the full settlement:
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Author: Johana Bhuiyan
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