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Lyft agreed to a $2.1 million settlement Proposed by the Federal Trade Commission Regarding the ride-hailing company’s “deceptive earnings claims about how much money drivers can expect to make.”
As documented in the FTC complaint document, Lyft systematically inflated the income it reported to the drivers it was trying to hire in 2021 and 2022. For example, in Los Angeles, it proposed that drivers would be offered up to $43 per hour. “Lyft failed to disclose that these amounts did not represent the income the average driver could expect to earn, but instead was based on the earnings of the top fifth of drivers,” and the difference was as much as 30%.
“Lyft claimed that drivers in New Jersey could earn up to $34 per hour, while Lyft’s own calculations put the average earnings at just $25 per hour. In the same month, Lyft claimed that drivers in Boston could They earned up to $42 an hour when the average income was just $33 an hour, the FTC wrote in the complaint.
Not only that, but the advertised hourly rates included tips from customers, while implying to any lay reader that it was the base rate. So the actual rate was probably $5 to $10 lower than even the undisclosed average.
It also made misleading promises about promotions and incentives, according to the FTC.
“For example, one guarantee promised drivers they would receive $975 if they completed 45 trips over the weekend. But these guarantees did not clearly disclose that drivers only received the difference between what they actually earned and the amount Lyft’s advertised content.
Although this was clear in the fine print, the language used was misleading, and Lyft received thousands of complaints from its drivers — a group that, the FTC notes, is disproportionately composed of people for whom English is not a native language.
The Federal Trade Commission warned Lyft in October 2021 that its practices were illegal and should stop — but it continued them, and the result is this order and the penalty.
Of course, $2.1 million is a drop in the bucket for Lyft, one of the world’s two dominant ride-hailing platforms. But the company has already had to formulate its pay promises: It can’t include tips in its hourly wage estimates, for example, and must more clearly explain promotions like “guaranteed” income.
Notably, two FTC commissioners dissented from the decision, saying the agency went too far in following the “earn-up” language as misleading. But Commissioner Ferguson’s argument, while coherent, amounts to “consumers know that advertisers exaggerate and lie” and will not take the “earn even” figure as representative of expected profits. Perhaps most convincingly, they argue that Lyft was not adequately notified that it was violating the law.
“Workers are not protected when the Commission claims victory on questionable legal theories, while settling complaints on pennies on the dollar with companies that are happy to pay the Commission to leave,” Ferguson wrote — and it’s a fair point.
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