Lyft Inc. (Lyft), the vehicle-for-hire and transportation service, has been fined $2.1 million for misleading drivers about their potential earnings.
The news was announced as part of a joint resolution achieved by the Justice Department and the Federal Trade Commission (FTC). Their investigation closed the civil case first filed in the U.S. District Court for the Northern District of California.
The government alleged that “as early as 2021, Lyft made false and misleading claims in its advertising and marketing regarding potential earnings and incentives to be earned by drivers who signed up to drive for Lyft.”
Lyft hit with $2.1 million civil penalty
“Lyft drivers deserve accurate information about how much they will be paid for the work they do,” said Director Samuel Levine of the FTC’s Bureau of Consumer Protection. “Our settlement with Lyft bans exaggerated earnings claims and underscores the FTC’s commitment to ensuring gig workers are treated fairly.”
In October 2021, a Notice of Penalty Offenses was issued to Lyft, informing the company that its misleading earnings statements were now under the scrutiny of government regulators.
Lyft reportedly broadcast and advertised the misleading statements across the United States, saying drivers could take home specific hourly rates. The company failed to mention that these high rates were among the 20% of drivers earning in their top demographic.
Failed disclosures on details of promotions and earnings
The company also failed to disclose the full details of promotions such as “earnings guarantees,” which stipulated a certain amount that drivers would be paid a set amount if they completed a specific number of rides in a particular time.
According to the Justice Department statement, “drivers were paid only the difference between what they otherwise earned for the rides and Lyft’s advertised guaranteed amount, rather than receiving the full guaranteed amount in addition to their regular earnings for the rides.”
The recently delivered court order instructs Lyft to pay a $2,100,000 civil penalty. The order also forbids Lyft from misrepresenting driver earnings and includes other monitoring and reporting provisions to promote Lyft’s compliance with the order.
“The Justice Department will vigorously enforce the law to stop companies from misleading Americans about their potential earnings in the gig economy,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to work with the FTC to stop unfair and deceptive marketing practices.”
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