Uber to Pay $20 Million for Recruiting Drivers with Exaggerated Earnings Claims
The money will refund affected drivers around the country
Ride-sharing company Uber has agreed to pay $20 million to settle Federal Trade Commission (FTC) charges that it recruited drivers with misleading and exaggerated claims about earnings and financing.
The FTC reports that the $20 million will be used to refund affected drivers throughout the U.S.
"Many consumers sign up to drive for Uber, but they shouldn't be taken for a ride about their earnings potential or the cost of financing a car through Uber," said Jessica Rich, Director of the FTC's Bureau of Consumer Protection. "This settlement will put millions of dollars back in Uber drivers' pockets."
The FTC claims that Uber's attempts to attract drivers included exaggerated claims about the yearly and hourly income that drivers could earn in certain cities and misled drivers regarding the terms of its options for vehicle financing.
According to the agency, Uber's website claimed that the annual median income of uberX drivers in New York was more than $90,000 and more than $74,000 in San Francisco. However, in New York their annual median income was $61,000, and it was $53,000 in San Francisco. Less than 10 percent of all Uber drivers in those cities made the annual income that the company claimed. The FTC also says that the company made claims in job listings about high hourly earnings, including listings on Craigslist, but that the average driver did not earn those amounts in various cities.
The FTC further alleges that Uber claimed that its Vehicle Solutions Program would give its drivers the "best financing options available" regardless of their credit histories. It told consumers that they could "own a car for as little as $20/day" or lease one with "payments as low as $17 per day" "starting at $119/week."
In spite of the company's claims, says the agency, the median weekly purchase and lease payments from at least late 2013 until April 2015 were more than $160 and $200, respectively. It neither controlled nor monitored the terms and conditions of its program's auto-financing agreements and, in reality, its drivers got worse average rates than consumers who had similar credit scores. Uber also claimed that its drivers could get leases with unlimited mileage through its program when in reality there were such limits on the leases.
In addition to the $20 million judgment, Uber is prohibited under the order from making misleading claims about its drivers' earnings and its auto-finance and lease claims.