Uber Settlement: FTC Is Sending Out Money After Company Lied to Drivers
The payments come after an endless torrent of scandal for the company.
Sharing economy drivers are used to small tips and low incomes, but thanks to a settlement between the Federal Trade Commission and Uber, contractors may be able to line their pockets with some much-needed cash.
On Monday, the FTC announced that in collaboration with Epiq, they would begin mailing settlement checks averaging $223 each to 88,799 drivers stemming from a previous complaint alleging that Uber lied to and misled contractors about average Uber income.
The payments signal a new era for the ride-sharing company that has previously aggressively fought regulation in the name of profits. A seemingly softer Uber is now paying the price for the high-profile missteps and aggressive tactics of former CEO Travis Kalanick.
We All Have to Settle Sometimes
The $20 million settlement was originally reached in January 2017, after the FTC claimed that Uber misled prospective drivers.
Uber reportedly claimed that the median income of uberX drivers was $90,000 in New York and $74,000 in San Francisco. The FTC says that in reality, the figures were tens-of-thousands of dollars less: $61,000 in New York and $53,000 in San Francisco.
Perhaps even worse for drivers is the allegation that Uber misled contractors about financing options they could provide for purchasing a car. According to the FTC, Uber told drivers that they could provide the “best financing options available,” citing agreements with payments of $140 per week for purchase and $120 per week to lease. The FTC says that the median payment for purchase was actually $160 per week, and $200 per week to lease.
When reached for comment, an Uber representative told Inverse: “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.”
Uber originally disputed the allegations, arguing that drivers who didn’t make the advertised income simply weren’t driving enough, according to a letter obtained by Gizmodo.
The settlement payments are just the latest news in an epic series of struggles and scandals.
Once valued at $70 billion, the company has now tumbled to a $48 billion valuation in the span of a year as a result of a reputational log roll into the muck.
After the company suspended surge pricing during Trump protests at New York’s JKF airport, leading many to believe that the company intended to profit off of a taxi union’s decision to strike and leading to the #DeleteUber campaign, Uber has seemingly suffered blow after blow. In February 2017, Uber was accused of having a systemic sexual harassment problem, sued over alleged intellectual property theft, and put under the spotlight after then-CEO Travis Kalanick was caught on tape telling an Uber driver “Some people don’t like to take responsibility for their own shit,” after being confronted about the company’s pay structure. In March 2017, it was revealed that Uber was operating a dark-version of their app that misled government investigators and that Kalanick brought employees to an escort bar in 2014, sparking unresolved HR complaints. In June 2017, Kalanick resigned.
In March 2018, an Uber car became one of the first self-driving vehicles to kill a pedestrian.
Of course, Uber’s problems were a long time coming — Uber has repeatedly faced lawsuits and complaints that it was mistreating workers by classifying them as contractors. In 2014, it was revealed that Uber was ordering and then canceling rides from competitors to interfere with their operations, and the company was forced to promise to limit surge pricing in disasters after horror-stories emerged from events like Hurricane Sandy.
Uber has finally been forced by its investors, and simply for survival, to adopt friendlier practices. Despite the fact that the FTC settlement came from the fact that Uber was misleading drivers, perhaps the payments will be a first step in regrowing trust in the company that has been hacked away at a record-setting pace.