Additional Coverage:
- Lyft agrees to pay $2.1 million penalty after FTC says company made ‘deceptive’ claims about how much drivers can earn (newsbreak.com)
Lyft Sued by US Government
The US Justice Department has sued Lyft for misleading drivers about potential earnings. The company allegedly claimed that drivers could earn up to $34 per hour, while internal data showed median earnings were only $25 per hour.
Deceptive Advertising
Lyft used a formula that excluded most drivers from earning the advertised hourly wages. By including tips in the advertised earnings, the company misled drivers into believing they would earn more than they actually did.
Settlement Reached
Lyft agreed to a settlement that includes a $2.1 million civil penalty. The settlement prohibits Lyft from making earnings claims without supporting evidence. Additionally, Lyft must disclose that tips are not included in advertised hourly earnings.
Transparency Initiatives
Lyft has implemented transparency initiatives, such as “upfront pay” and an earnings summary, to address driver concerns. The settlement requires Lyft to continue these efforts and notify drivers of the settlement.
Future Impact
The settlement is expected to prevent Lyft from making deceptive earnings claims in the future. It also sends a message to other companies that they must be transparent about driver compensation.