Regulatory Authority Levies Multi-Million-Dollar Penalty on Lyft for Misrepresenting Driver Income Statements
In a move to protect workers in the gig economy, the Federal Trade Commission (FTC) has taken action against rideshare operator Lyft for making deceptive earnings claims. The FTC alleges that Lyft overinflated the hourly earnings achieved by most drivers by as much as 30%, misleading service providers about their potential earnings.
The settlement requires Lyft to back up any claims it makes about drivers' pay with evidence and prohibits the company from making earnings claims without meaningful evidence. Lyft has agreed to pay a $2.1 million civil penalty as part of the settlement.
The complaint notes that Lyft's hourly earnings claims included tips paid by passengers, which are now prohibited from being included as part of stated hourly earnings. The settlement also requires Lyft to clearly disclose to drivers how its earnings guarantees work and to notify drivers about the terms of these guarantees.
Additionally, Lyft will be required to provide notice to its drivers about the settlement and to clearly notify drivers about the terms of its "earnings guarantee" offers. The settlement is part of the FTC's ongoing efforts to protect workers in the gig economy, as detailed in its Policy Statement on Enforcement Related to Gig Work.
This is not the first time the FTC has taken action against companies in the gig economy. In 2021, the FTC reached a settlement with Amazon returning more than $60 million to Amazon Flex drivers. The U.S. Department of Justice filed the lawsuit and proposed settlement against Lyft.
The FTC Chair, Lina M. Khan, stated that it is illegal to lure workers with misleading claims about earnings. The FTC's action against Lyft is a clear message that companies cannot mislead workers about potential earnings in the gig economy.
While there is mention of Lyft misrepresenting driver earnings in Boston, claiming drivers could earn up to $42 per hour when median earnings were just $33 per hour, there is no specific information regarding a settlement between the FTC and Lyft concerning deceptive earnings claims about driver pay. It is recommended to check official FTC announcements or legal updates for more information on a specific FTC action.
- The FTC's settlement with Lyft underlines the importance of financing claims in the business sector, as the company is now obligated to provide evidence for any pay claims and cannot do so without substantial proof.
- The ongoing policy-and-legislation efforts by the FTC in the politics sphere, such as the recent action against Lyft, aim to combat misleading earnings claims in the general-news arena, especially concerning the gig economy.
