Lyft agrees to pay $2.1 million penalty after FTC says company made 'deceptive' claims about how much drivers can earn

• The US Department of Justice revenge a suit against Lyft connected Friday.
• The FTC said Lyft made "deceptive" claims astir really overmuch money drivers could gain per hour.
• Lyft agreed to a projected colony that included a $2.1 cardinal civilian penalty.

Lyft has agreed to salary a $2.1 cardinal civilian punishment arsenic portion of a projected colony pursuing a national lawsuit, according to nan Federal Trade Commission.

The US Department of Justice revenge a title against Lyft connected Friday, saying nan rideshare institution violated nan Federal Trade Commission Act betwixt April 2021 and June 2022.

The section said Lyft made "deceptive net claims" astir really overmuch drivers could gain each hr — and successful typical incentives — successful immoderate advertisements.

"Lyft utilized nan hourly net calculation astatine nan 80th percentile for a fixed region. As a result, moreover relying connected Lyft's ain calculations, only nan apical 20% of Drivers — that is, only 1 successful 5 Drivers — earned nan hourly net figures quoted successful nan ads," nan title said. "For example, successful August 2021, Lyft claimed that Drivers successful New Jersey could gain up to $34 per hr erstwhile Lyft's ain calculations put nan median net astatine only $25 per hour."

The Justice Department's title said that "because Lyft presented nan net declare arsenic an hourly magnitude and did not disclose that tips were factored into nan figure, galore Drivers were apt to judge that nan tips they earned would beryllium further to nan hourly net advertised by nan company."

Lyft besides shared advertisements pinch "earnings guarantees"
that "misled" drivers into believing they would person nan guaranteed magnitude arsenic a prize connected apical of their mean earnings, according to nan complaint.

The title said nan FTC sent a missive to Lyft successful 2021 informing nan institution that it could beryllium liable for civilian penalties.

"Lyft continued to make deceptive net claims successful its advertisements moreover aft receiving nan Notice," nan title said.

The institution agreed to a projected colony nan aforesaid day, saying that it neither admitted nor denied immoderate of nan US government's claims.

When asked for a comment, a Lyft typical directed Business Insider toward a connection connected nan company's website.

"After productive discussions, we person agreed to salary nan FTC $2.1 cardinal USD to resoluteness their concerns. We agreed to this colony because we admit nan value of transparency successful maintaining spot successful nan communities we serve," nan connection said.

The connection referenced transparency initiatives launched by Lyft, including "upfront pay" introduced successful October 2022 and distributing a caller net summary successful February "so drivers tin spot a breakdown of wherever each cent of nan rider fare goes."

The colony requires Lyft to salary a $2.1 cardinal civilian penalty.

"In summation to requiring nan institution to salary a $2.1 cardinal civilian penalty, nan projected colony besides will prohibit Lyft from making immoderate net declare unless they person meaningful grounds to backmost that declare up," nan FTC said successful a property release. "In addition, Lyft will beryllium prohibited from making immoderate claims astir hourly net that see tips arsenic portion of nan stated hourly amount."

The colony said Lyft must besides disclose to drivers that — nether its net guarantees — they will person only nan quality betwixt their regular net and nan guaranteed amount.

It besides requires Lyft to notify drivers of nan settlement.