On October 26, 2024, the ride-sharing company Lyft has agreed to pay a civil penalty of $2.1 million to settle charges brought by the Federal Trade Commission (FTC) in the United States. The FTC accused the company of misleading drivers on how much they could earn and deceiving them into working for the ride-sharing company.
The FTC, in a statement released on Friday, October 25, stated that Lyft has agreed to a proposed settlement that requires the company to base statements made about driver earnings on typical income. Additionally, Lyft has also agreed to provide evidence to support any statements made about driver earnings, clearly informing drivers of the scope of the “income guarantee” clause, and to pay a $2.1 million civil penalty.
According to the statement, the U.S. Department of Justice filed the lawsuit after receiving notification and referral from the FTC and proposed the settlement.
FTC Chairwoman Lina Khan stated in the release, “Deceptive claims about earnings entice workers illegally. When companies break the law and exploit American workers, the FTC will continue to use all its tools to hold companies accountable.”
The agency alleged in the complaint against Lyft that as demand for ride-sharing services increased in 2021 and 2022, the company made numerous false and misleading statements in advertising and marketing, claiming drivers could earn certain amounts if they chose to drive for the company, with the figures overstating actual earnings for most drivers by 30%. Additionally, Lyft also attempted to lure drivers by selling an “income guarantee” in advertisements, which was also a deceptive claim.
The complaint submitted to the court noted that the FTC sent Lyft a notice of the fine after receiving complaints, informing the company of its violation. However, the company continued to make deceptive statements about driver earnings thereafter.
The FTC stated in Friday’s release that the current action is one of the measures the agency has taken to protect workers in the gig economy.
The proposed settlement agreement was submitted to a federal court in San Francisco, California on Friday and requires approval from a judge.
Lyft, headquartered in San Francisco, did not admit to nor deny any wrongdoing in agreeing to the settlement.
The ride-sharing giant stated in a release that it is committed to clearly outlining income prospects to drivers before they sign up and is following best practices recommended by the FTC.
The FTC supported the settlement agreement with a 3-2 vote.