Lyft has agreed to tell its drivers how much they can actually earn from a ride-hailing service — and back it up with evidence — as part of a settlement filed by the US Department of Justice and the Federal Trade Commission. The lawsuit accused the company of making “numerous false and misleading claims” in advertisements it ran in 2021 and 2022, when demand for rides recovered following years of COVID-19 shutdowns. Lyft promised drivers up to $43 an hour in some locations, the FTC said, without disclosing that those numbers were based on the earnings of its top drivers.
The prices it published allegedly understated the average salary of drivers and inflated the actual salary by up to 30 percent. In addition, the FTC said Lyft “failed to disclose” that information, as well as the fact that the prices it published included tips for passengers. The company also promised in its advertisements that drivers would be paid a set amount if they completed a certain number of rides within a certain period of time. A driver should make $975, for example, if he completes 45 rides over the weekend.
Lyft allegedly did not make it clear that it would only pay the difference between what drivers earn and the guaranteed wages that were promised. Drivers thought they were getting those guaranteed payments on top of their ride payments as a bonus for completing a certain number of rides. The FTC accused Lyft of continuing to make “deceptive profit claims” even after it sent the company notice of its concerns in October 2021.
Earlier this month, the company launched a salary dashboard that shows the average hourly rate for each trip, as well as the driver’s daily, weekly and annual earnings. But under the settlement, Lyft would have to tell drivers how much of their take-home pay is based on the regular fare, instead of the increased fare. It should take tips out of the equation, and it should clarify that it will only pay the difference between what drivers earn for rides and its guaranteed wage promises. Finally, it will have to pay a civil penalty of $2.1 million.
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