Lyft has reached a settlement with the US Justice Department and the Federal Trade Commission (FTC) to provide transparent and evidence-backed information to its drivers about their potential earnings on the platform. This agreement comes in response to a lawsuit alleging that the company made “numerous false and misleading claims” in its advertisements during 2021 and 2022. These advertisements, released when the demand for rides surged post-COVID-19 lockdowns, promised drivers earnings of up to $43 per hour in certain areas. However, the FTC highlighted that these figures were based on the top performers among the drivers.
The published rates allegedly did not reflect the average earnings of drivers, with an inflation of up to 30 percent, and failed to disclose that these amounts included passenger tips. Additionally, Lyft’s advertisements suggested that drivers would earn a guaranteed amount if they completed a specified number of rides in a certain period, for example, $975 for completing 45 rides over a weekend.
The FTC claimed that Lyft did not make it clear that it would only pay the difference between actual earnings and the promised guaranteed earnings, leading drivers to believe that they would receive these payments on top of their ride earnings as an additional bonus. Despite being informed of these concerns by the FTC in October 2021, Lyft allegedly continued to make “deceptive earnings claims.”
Recently, Lyft introduced an earnings dashboard that presents the estimated hourly rate for each ride and the driver’s daily, weekly, and yearly earnings. As part of the settlement, Lyft is now required to provide accurate information about drivers’ potential take-home pay based on typical earnings excluding tips. It must also clarify that it will only pay the difference between ride earnings and the guaranteed amount. Moreover, Lyft is obliged to pay a civil penalty of $2.1 million.
