Uber has agreed to pay $20 million to settle allegations of engaging in deceptive practices. Documents filed by the Federal Trade Commission in San Francisco detailed the agreement. Under the agreement, drivers that were affected by the practices will be issued refunds. The FTC has not yet determined exactly how the issuing of refunds will be accomplished.
The complaint detailed instances where Uber had engaged in unfair or deceptive practices. Those deceptive practices included exaggerating how much its drivers could earn and encouraging the drivers to lease cars through a ‘low-cost’ program that was not low cost. The FTC also alleged that the company overstated the hourly earnings of its drivers in job listings, with Uber’s own data showing fewer than 10 percent of drivers averaged the promised hourly rate.
It was alleged that Uber claimed drivers could “earn specific high hourly and yearly earnings” but in many instances they did not. In one example, Uber said on its website that the median income of uberX Drivers was “more than $90,000/year/driver in New York and more than $74,000/year/driver in San Francisco.” However, the actual numbers were much lower at $61,000 for an uberX driver in New York City and $53,000 in San Francisco, according to the FTC.
The agency also had issues with the way Uber ran its Vehicle Solutions Program which allowed drivers to lease cars, with the auto payments automatically deducted from the driver’s weekly fares. Uber advertised the program to its drivers as “low cost,” saying that they could “own a car for as little as $20/day” or lease one with “payments as low as $17 per day.” This translates to $119 to $140 a week. The FTC claims that between late 2013 and April 2015, the median lease payments were actually between $160 and $200.
According to the FTC complaint, Uber did not know whether the statements that it made were actually true. The company never collected, received or monitored any data about the program’s terms. In fact, correspondence from the company to drivers that complained stated, “Please contact your lender to discuss your payments, accruals or amounts owed, as Uber does not keep track of this information.”
Drivers were also told that they could receive the “best financing options available,” regardless of credit history. However, drivers working through Uber’s plan supposedly received worse rates than drivers with similar credit scores. The complaint claimed that at least 1,900 drivers entered into such contracts with the company.
In a statement, Uber said it was pleased to have reached an agreement with the FTC. The company did not admit to wrongdoing in the settlement agreement.