FTC Settlement Overview
Lyft has agreed to a $2.1 million settlement following charges from the U.S. Federal Trade Commission (FTC) over allegedly inflating driver earnings prospects in advertisements during 2021 and 2022. The settlement, filed in San Francisco federal court, awaits judicial approval.
Table of Contents
What Led to the Settlement?
- Driver Shortage During Pandemic Recovery: Lyft ran advertisements targeting new drivers amid a “supply crunch,” as vaccine rollouts spurred demand for ride-hailing services.
- Misleading Hourly Pay Claims: The FTC alleged that Lyft promoted hourly earnings based on the top 20% of drivers, giving prospective drivers a skewed impression of what they could realistically earn.
- Earnings Guarantees: The ads also suggested bonuses for drivers, leading to “tens of thousands” of complaints when the terms and conditions were not communicated.
FTC’s Response
FTC Chair Lina Khan stated:
“It is illegal to lure workers with misleading claims about how much they will earn on the job.”
Settlement Requirements
As part of the settlement, Lyft must:
- Base Earnings Claims on Typical Driver Pay: Advertised pay must reflect what most drivers earn, not just top performers.
- Provide Evidence for Claims: All future earnings advertisements must be substantiated with clear data.
- Clarify Terms for Bonuses: Ensure transparency regarding any bonus or earnings guarantee program.
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Lyft’s Position
Without admitting or denying the allegations, Lyft expressed its commitment to transparency in driver earnings and adherence to FTC guidelines moving forward.
Regulatory Backing
The FTC voted 3-2 to approve the settlement. This case highlights regulatory scrutiny over gig economy companies and their treatment of workers.
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Stay tuned for updates on how this settlement may influence advertising practices across the gig economy.
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