Taxi and ride-sharing organisation Uber is to pay $20 million (£16,252,235) to settle a claim that it misled prospective drivers by exaggerating how much they could earn in certain cities.
The US Federal Trade Commission (FTC), which brought the charges against Uber, allege that in order to attract new drivers, Uber exaggerated the yearly and hourly income drivers could earn in certain cities, and misled potential drivers about the terms of its vehicle financing options.
The FTC contends that although Uber advertised an annual median income of more than $90,000 (£73,230.27) in New York and $74,000 (£60,211.55) in San Francisco on its website, less than 10% of drivers earned these amounts. The FTC claims that drivers’ actual annual median income in these cities was $61,000 (£49,633.85) and $53,000 (£43,124.49), respectively.
The FTC alleges that Uber also advertised hourly earnings in job listings, including on Craigslist, that are higher than the typical driver earned.
In addition, the FTC claims that drivers were misled about Uber’s Vehicle Solutions Programme, which advertised that drivers could own a car for $140 (£113.91) a week or lease a car for $119 (£96.83) a week. The FTC, however, found these figures to exceed $160 (£130.19) and $200 (£162.73) respectively, with drivers receiving a worse rate on average than they would typically obtain with their credit rating.
Uber has agreed to pay $20 million to settle the FTC claim. The money will be used to refund affected drivers across the country. The stipulated order also prohibits Uber from misrepresenting drivers’ earnings and auto finance and lease terms.
Jessica Rich, director of the Bureau of Consumer Protection at the FTC, said: “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. This settlement will put millions of dollars back in Uber drivers’ pockets.”
An spokesperson at Uber said: “We’re pleased to have reached an agreement with the FTC. We’ve made many improvements to the driver experience over the last year and will continue to focus on ensuring that Uber is the best option for anyone looking to earn money on their own schedule.”