Lyft has agreed to inform its drivers how much they can actually earn on the ride-hailing platform (and back it up with evidence) as part of their settlement in a lawsuit filed by the U.S. Department of Justice and the Federal Trade Commission. The lawsuit accused the company of making “numerous false and misleading claims” in ads it ran in 2021 and 2022, when travel demand recovered following COVID-19 shutdowns in previous years. Lyft promised drivers up to $43 an hour in some locations, the FTC said, without disclosing that those figures were based on the earnings of its top drivers.
The rates it posted allegedly did not represent drivers' average earnings and inflated actual earnings by up to 30 percent. Additionally, the FTC said Lyft “failed to disclose” that information, as well as the fact that the amounts it posted included rider tips. The company also promised in its ads that drivers will be paid a set amount if they complete a certain number of trips within a specific time period. A driver is supposed to earn $975, for example, if he completes 45 trips over a weekend.
Lyft allegedly did not clarify that it will only pay the difference between what drivers earn and the promised guaranteed earnings. Drivers thought they got those guaranteed payments on top of their ride payments as a bonus for completing a specific number of rides. The FTC accused Lyft of continuing to make “misleading earnings claims” even after sending the company notice of its concerns. in October 2021also.
Earlier this month, the company launched an earnings dashboard showing the estimated hourly rate for each trip, along with the driver's daily, weekly, and annual earnings. But under the deal, Lyft will have to explicitly tell drivers how much their potential take-home pay will be based on typical earnings, rather than inflated earnings. You have to remove tips from the equation and you have to make it clear that you will only pay the difference between what drivers get from rides and your promise of guaranteed earnings. Finally, he will have to pay a civil fine of $2.1 million.
