Ride-hailing giant Uber has today agreed to pay $20 million in fines to settle a lawsuit filed by the Federal Trade Commission (FTC) against the exaggerated claims made by them to attract drivers to its platform. The lawsuit had alleged the company for pushing ads that made false claims about how much the drivers could earn through the app. It also misled them on grounds of their affordable vehicle financing plans.
According to the FTC’s complaint, in its efforts to attract prospective drivers, Uber exaggerated the yearly and hourly income drivers could make in certain cities, and misled prospective drivers about the terms of its vehicle financing options.
As for the lawsuit, FTC took notice of the misleading adverts issued by Uber about the money drivers can earn if they drive for them in over 20 cities in the United States. The company was promising annual earnings to the tunes of $90,000 in New York and over $74,000 in San Francisco for Uber X drivers. But the FTC discovered that the same wasn’t, in fact, true and the ride-hailing giant was duping its drivers.
The authorities alleged that the annual median income for an Uber X driver was $61,000 in New York and $53,000 in San Francisco — that was way off the figures being advertised. The FTC also alleged that the hourly rates listed in these adverts on Craigslist were way higher than those being earned by the drivers on road. Only a fraction of the drivers, nearly 10 percent, were actually getting paid what was promised.
Further, the FTC also pointed out shortcomings in the company’s Vehicle Solutions Program. This initiative claimed to provide people with the “best financing options available,” regardless of their credit history. The adverts stated that the driver would be able to own a vehicle for as low as $20 per day ($140/week)or lease one for as low as $17 per day (nearly $119/week). But, this was also allegedly proven incorrect by them.
Taking the median of these payments from late 2013 through April 2015, the FTC found that the median weekly purchase was over $160 and $200 respectively. It filed a complaint against them for faltering on terms and conditions of the auto financing agreements. Also, Uber had advertised that these financing options will come with unlimited mileage but the same was restricted when the car was offered to drivers. It is also one of the key highlights of the said complaint.
The official blog post says that Uber isn’t agreeing to any wrongdoings with regards to the said settlement. Instead, it has just agreed to fess up $20 million in fines, that’ll be distributed among drivers affected by this publicity stunt. The FTC further adds that Uber has promised to provide drivers with the best possible financing options — either to own or lease a vehicle.
Talking about settlement, Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, says,
Many consumers sign up to drive for Uber, but they shouldn’t be taken for a ride about their earnings potential or the cost of financing a car through Uber. This settlement will put millions of dollars back in Uber drivers’ pockets.
With regards to the settlement, an Uber spokesperson dispensed the following statement:
We’re pleased to have reached an agreement with the FTC. We’ve made many improvements to the driver experience over the last year and will continue to focus on ensuring that Uber is the best option for anyone looking to earn money on their own schedule.