As part of a settlement of a lawsuit brought by the U.S. Department of Justice and the Federal Trade Commission, Lyft agreed to tell drivers how much they can actually earn on its ride-hailing platform and back it up with evidence. The lawsuit accuses the company of making “numerous false and misleading claims” in ads it published in 2021 and 2022, when demand for rides recovered after the previous year’s coronavirus lockdowns. The FTC said Lyft promised drivers up to $43 an hour in some areas, but did not specify that the figure was based on top drivers’ incomes.
The published fares do not represent the average earnings of drivers and are said to have inflated their actual earnings by up to 30%. The FTC also said Lyft “failed to disclose” that information and the fact that the amount it disclosed included passenger tips. In the ad, the company also promised drivers that they would receive a certain amount of money if they completed a certain number of rides within a certain time frame. For example, if a driver completes 45 trips over the weekend, they will earn $975.
Lyft allegedly failed to clarify that it would only pay the difference between a driver’s income and the promised guaranteed income. Drivers thought they were receiving a guaranteed payment on top of the ride price as a bonus for completing a certain number of rides. The FTC accused Lyft of continuing to make “false revenue claims” after sending it a notice of concern in October 2021.
Earlier this month, the company launched an earnings dashboard that shows drivers’ daily, weekly, and annual earnings, as well as an estimated hourly wage for each ride. But under the settlement, Lyft must explicitly tell drivers what their potential take-home pay will be based on typical earnings, not inflated amounts. Tips need to be taken out of the equation and it needs to be made clear that drivers only pay the difference between what they earn from a ride and their guaranteed earnings. He will ultimately have to pay a civil penalty of $2.1 million.
