Uber to pay $20 million settlement for making false promises to drivers

by Sean Riley


Score one for the drivers.

Uber has agreed to pay $20 million in a settlement in a lawsuit over claims the company misled drivers regarding how much they would earn and the terms of their car financing program.

The Federal Trade Commission (FTC) filed suit against the ride-hailing company for promising prospective drivers on its website about 30 percent more annual pay than they received. The agency claimed Uber advertised an average median salary for UberX drivers to be more than $90,000 in New York and $74,000 in San Francisco, when the actual median income was $61,000 and $53,000 respectively. Additionally, the FTC said fewer than 10 percent of drivers in those cities earned Uber’s advertised salaries.

Uber’s controversial car financing program was also included in the government’s complaint. The FTC found that Uber drivers who used the Vehicle Solutions Program were paying up to 60 percent more in weekly car lease payments compared to what Uber advertised. The company severed its relationship with the program’s lender, Banco Santander, which has been accused of predatory loan practices.

Uber didn’t admit or deny culpability to the claims, and waived rights to challenge the settlement, according to court filings. As a condition of the settlement, Uber has to submit a compliance report next year detailing its advertising, marketing, and sales activities with explanation of how it complied with the order.

A company spokesperson told the Verge, “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.”

The $20 million settlement is the latest legal challenge in Uber’s ongoing fight with its drivers. The ride-hailing company, along with its competitor Lyft, have been tangling with driver complaints that their employment status is misclassified as contractors rather than employees. In September, Uber tried to settle a class-action suit for those complaints but a judge rejected the company’s $100 million offer as insufficient.

Additionally, Uber drivers worldwide continue to protest its fare cuts, claiming that it eats into their earnings and makes it hard for full-time drivers to earn a living.

Uber has had to settle similar suits over its wording in advertisements to consumers. A judge rejected Uber’s $28.5 million settlements in September for two class-action suits over the company charging a fee for “safe rides,” which covered background checks, and mischaracterizing the company’s safety practices. Uber was also ordered to repay $47,000 customers a total of $374,000 for charging a 20 percent gratuity that was supposed to be included in the fare.

If its legal troubles aren’t enough, the company has also lost more than $2 billion in 2016, marked by slowed growth.