By SDCN Editor
The Justice Department and the Federal Trade Commission on Friday announced that Lyft Incorporated has agreed to resolve allegations that it made false and misleading statements about how much Lyft drivers would earn.
The settlement includes an agreement to pay $2.1 million in civil penalties and a permanent injunction prohibiting such false and misleading earnings claims.
Lyft operates a mobile app ride-hailing platform that connects consumers seeking rides with those who provide rides with their vehicles. Through marketing campaigns and advertisements, Lyft recruits drivers. After a driver is hired, Lyft sets the rates the driver charges and collects a portion of the fare for each ride. In a civil complaint filed in the U.S. District Court for the Northern District of California, the government alleges that, as early as 2021, Lyft made false and misleading claims in its advertising and marketing regarding potential earnings and incentives to be earned by drivers who signed up to drive for Lyft. Lyft allegedly continued these practices even after it received a Notice of Penalty Offenses in October 2021 that placed the company on notice that false and misleading earnings claims were unlawful.
The complaint alleges that Lyft disseminated advertisements promoting specific hourly amounts that drivers throughout the United States could earn. The company, however, did not disclose that the potential hourly amounts were based on the earnings of the top 20% of its drivers. The complaint alleges that Lyft also tried to induce drivers to offer more rides by promoting “earnings guarantees,” which guaranteed that drivers would be paid a set amount if they completed a specific number of rides in a certain time. These guarantees allegedly did not disclose that drivers were paid only the difference between what they otherwise earned for the rides and Lyft’s advertised guaranteed amount, rather than receiving the full guaranteed amount in addition to their regular earnings for the rides.
In the stipulated order entered today by the federal district court, Lyft is required to pay a $2,100,000 civil penalty. The order also enjoins Lyft from making any misrepresentations regarding driver earnings and includes other monitoring and reporting provisions aimed at promoting Lyft’s compliance with the order.
“The Justice Department will vigorously enforce the law to stop companies from misleading Americans about their potential earnings in the gig economy,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to work with the FTC to stop unfair and deceptive marketing practices.”
“Lyft drivers deserve accurate information about how much they will be paid for the work they do,” said Director Samuel Levine of the FTC’s Bureau of Consumer Protection. “Our settlement with Lyft bans exaggerated earnings claims and underscores the FTC’s commitment to ensuring gig workers are treated fairly.”
The case was managed by trial Attorney Paulina Stamatelos and Assistant Director Zachary Dietert from the Civil Division’s Consumer Protection Branch, with support from Assistant U.S. Attorney Ekta Dharia for the Northern District of California, and Abdiel Lewis and Evan Rose from the FTC’s Bureau of Consumer Protection.
