Lyft To Pay $2.1M in Civil Penalties for Misleading Drivers

San Francisco – In a shocking turn of events, ride-hailing giant Lyft Inc. has agreed to pay $2.1 million in civil penalties to resolve allegations that it made false and misleading statements about how much drivers would earn.

According to a complaint filed in the U.S. District Court for the Northern District of California, 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 the company.

The government alleges that Lyft disseminated advertisements promoting specific hourly amounts that drivers throughout the United States could earn, without disclosing that the potential hourly amounts were based on the earnings of the top 20% of its drivers.

Additionally, the complaint alleges that Lyft 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, without clearly disclosing that drivers were paid only the difference between what they otherwise earned for the rides and Lyft’s advertised guaranteed amount.

Lyft operates a mobile app ride-hailing platform that connects consumers seeking rides with those who provide rides with their own personal 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.

Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, said, “The Justice Department will vigorously enforce the law to stop companies from misleading Americans about their potential earnings in the gig economy.”

Director Samuel Levine of the FTC’s Bureau of Consumer Protection added, “Lyft drivers deserve accurate information about how much they will be paid for the work they do. Our settlement with Lyft bans exaggerated earnings claims and underscores the FTC’s commitment to ensuring gig workers are treated fairly.”

The stipulated order entered today by the federal district court requires Lyft to pay a $2,100,000 civil penalty and prohibits the company from making any misrepresentations regarding driver earnings.

The order also includes other monitoring and reporting provisions aimed at promoting Lyft’s compliance with the order.

The settlement is a significant blow to Lyft, which has faced criticism in the past for its treatment of drivers.

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