By Jonathan Stempel
Lyft (LYFT.O), agreed to pay a $2.1 million civil fine to settle U.S. Federal Trade Commission charges it misled prospective drivers about how much money they might earn working for the ride-hailing company.
A proposed settlement was filed on Friday in San Francisco federal court, and requires a judge’s approval.
The case stemmed from advertisements that Lyft placed in 2021 and 2022 to address a driver shortage it referred to internally as a “supply crunch,” as growing access to COVID-19 vaccines boosted demand for its services.
According to the FTC, Lyft deceived drivers about how much they could make per hour by featuring hourly earnings based on the top 20% of drivers, which meant most drivers were unlikely to earn the advertised pay.
Lyft’s ads also featured “earnings guarantees” that misled drivers into believing they would receive bonuses, leading to tens of thousands of driver complaints, the FTC said.
“It is illegal to lure workers with misleading claims about how much they will earn on the job,” FTC Chair Lina Khan said in a statement.
The settlement also requires Lyft to base claims about driver pay on typical earnings, back up those claims with evidence, and make the terms of its earnings guarantees clear.
Lyft did not admit or deny wrongdoing in agreeing to settle.
In a statement, the San Francisco-based company said it was committed to clearly communicating earnings prospects to drivers before they sign up, and to following FTC best practices.
The FTC voted 3-2 in favor of the settlement.
Get all the latest tax, accounting, audit, and corporate finance news with Checkpoint Edge. Sign up for a free 7-day trial today.
