WASHINGTON, D.C.— The Federal Trade Commission (FTC) has initiated legal action against the rideshare company Lyft, alleging deceptive practices related to earnings claims for its drivers. The FTC’s complaint, filed by the U.S. Department of Justice, seeks to address misleading advertisements that falsely represented potential earnings, thereby influencing individuals to drive for Lyft under false pretenses.
The crux of the FTC’s allegations centers on Lyft’s portrayal of driver earnings, which were purportedly inflated to attract new drivers during a period of heightened demand for rideshare services in 2021 and 2022. Advertisements broadcasted across several major cities, including Atlanta, Portland, and Los Angeles, claimed drivers could earn hourly rates significantly higher than average. However, these figures were derived from the top echelon of driver earnings, misrepresenting the typical earnings that most drivers could realistically expect.
Moreover, the FTC’s complaint highlights that Lyft’s earnings projections misleadingly included passenger tips in the hourly wage, misleading many drivers to believe tips were supplementary to their hourly earnings. The company’s “earnings guarantees” further compounded this deception. Promising a specific income for a set number of rides, these guarantees did not clearly communicate that drivers would only receive the difference between their actual earnings and the promised amount, leading to widespread confusion and dissatisfaction among drivers.
FTC Chair Lina M. Khan emphasized the illegality of using misleading income projections to recruit workers, asserting the FTC’s commitment to holding companies accountable for exploiting labor through deceptive practices. “The FTC will keep using all its tools to hold businesses accountable when they violate the law and exploit American workers,” Khan stated.
As part of the proposed settlement, Lyft has agreed to pay a $2.1 million civil penalty and adhere to several stipulations designed to prevent future misconduct. The settlement mandates that Lyft substantiate any earnings claims with credible evidence and precludes the inclusion of tips in advertised hourly wages. Furthermore, Lyft is required to transparently inform drivers that earnings guarantees reflect only the gap between actual earnings and advertised amounts, not an additional bonus.
The settlement also obliges Lyft to notify drivers about the terms of the agreement, underscoring the FTC’s broader enforcement strategy to protect workers from misleading business practices. With this action, the FTC aims to reinforce truthful advertising standards across industries, ensuring workers can make informed decisions based on accurate information.
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