Lyft agreed to a $2.1 million settlement offered by the FTC over the company’s “misleading revenue claims about how much drivers could expect to earn.”
As detailed in the FTC’s complaint document, Lyft systematically inflated the earnings advertised to drivers it was trying to recruit in 2021 and 2022. For example, in Los Angeles, it suggested that drivers would be offered up to $43 per hour. “Lyft failed to disclose that these amounts did not represent the income an average driver could expect to earn, but rather were based on the income of the richest fifth of drivers,” and the difference was as high as 30 percent.
“Lyft claimed that New Jersey drivers could earn up to $34 an hour, while its own calculations put the median wage at just $25 an hour. The same month, Lyft claimed that Boston drivers could earn up to $42 per hour, while the median wage was only $33 per hour,” the FTC wrote in the complaint.
Additionally, the advertised hourly rates included tips provided by customers, while implying to any normal reader that this was a base rate. The effective rate was therefore probably $5 to $10 lower than the unreported average.
He also made misleading promises about promotions and incentives, according to the FTC.
“For example, one guarantee promised drivers they would earn $975 if they took 45 trips over the course of a weekend. But these guarantees did not make clear that drivers only received the difference between what they actually earned and the guaranteed amount Lyft advertised,” the FTC said in its press release.
While that was clear in the fine print, the language used was misleading, and Lyft received thousands of complaints from its drivers — a group that, the FTC points out, is disproportionately made up of people whose English is poor. is not the mother tongue.
The FTC warned Lyft in October 2021 that its practices were illegal and that it needed to stop – but it continued with them, and the result is this order and penalty.
Of course, $2.1 million is a drop in the ocean for Lyft, one of the world’s two dominant ride-sharing platforms. But the company has already had to refine its payment promises: It can’t include tips in its hourly rate estimates, for example, and it must more clearly explain promotions like “guaranteed” income.
Notably, two FTC commissioners disagreed with the decision, saying the agency went too far in considering the term “earn up to” to be misleading. But Commissioner Ferguson’s argument, while consistent, amounts to saying that “consumers know that advertisers exaggerate and lie” and would not consider the “earn up to” figure to be representative of expected revenue. Perhaps more convincingly, they argue that Lyft was not adequately informed that it was breaking the law.
“Workers are also not protected when the Commission claims victory over dubious legal theories while it settles complaints for pennies on the dollar with companies that are happy to pay the Commission to go away “, writes Ferguson – a fair point.