The Department of Justice has announced that ridesharing app Lyft will pay $2.1 million in civil penalties for misleading drivers about their potential earnings.
The DOJ and Federal Trade Commission also secured a permanent injunction “prohibiting such false and misleading earnings claims.”
In a press release about the settlement, the DOJ said, “In a civil complaint filed in the U.S. District Court for the Northern District of California, the government alleges that, as early as 2021, Lyft made false and misleading claims in its advertising and marketing regarding potential earnings and incentives to be earned by drivers who signed up to drive for Lyft. Lyft allegedly continued these practices even after it received a Notice of Penalty Offenses in October 2021 that placed the company on notice that false and misleading earnings claims were unlawful.”
The complaint alleged that Lyft advertised hourly amounts that drivers could earn but did not disclose that the amount was based on the top 20 percent of its drivers across the United States.
“The complaint also further alleges that Lyft also tried to induce drivers to offer more rides by promoting ‘earnings guarantees,’ which guaranteed that drivers would be paid a set amount if they completed a specific number of rides in a certain time,” the press release continued. “These guarantees allegedly did not clearly disclose that drivers were paid only the difference between what they otherwise earned for the rides and Lyft’s advertised guaranteed amount, rather than receiving the full guaranteed amount in addition to their regular earnings for the rides.”
Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, said, “The Justice Department will vigorously enforce the law to stop companies from misleading Americans about their potential earnings in the gig economy. We will continue to work with the FTC to stop unfair and deceptive marketing practices.”
“Lyft drivers deserve accurate information about how much they will be paid for the work they do,” said Director Samuel Levine of the FTC’s Bureau of Consumer Protection. “Our settlement with Lyft bans exaggerated earnings claims and underscores the FTC’s commitment to ensuring gig workers are treated fairly.”
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