The Justice Department and the Federal Trade Commission (FTC) have announced a settlement with Lyft Inc. regarding allegations of misleading statements about driver earnings. The agreement includes a $2.1 million civil penalty and a permanent injunction against making false claims about potential earnings.
Lyft, which operates a ride-hailing platform through a mobile app, recruits drivers via marketing campaigns. The company sets rates for rides and collects part of the fare. According to a civil complaint filed in the U.S. District Court for the Northern District of California, Lyft allegedly made false claims about potential earnings from as early as 2021. These practices reportedly continued even after receiving a Notice of Penalty Offenses in October 2021, which warned that such claims were unlawful.
The complaint states that Lyft advertised specific hourly earnings without disclosing that these figures were based on the top 20% of drivers' earnings. Additionally, Lyft promoted "earnings guarantees" without clearly stating that drivers would only receive the difference between their actual earnings and the guaranteed amount.
A federal district court order requires Lyft to pay $2,100,000 in penalties and prohibits any misrepresentation regarding driver earnings. It also includes monitoring provisions to ensure compliance.
Principal Deputy Assistant Attorney General Brian M. Boynton stated, "The Justice Department will vigorously enforce the law to stop companies from misleading Americans about their potential earnings in the gig economy." FTC Bureau of Consumer Protection Director Samuel Levine added, "Lyft drivers deserve accurate information about how much they will be paid for the work they do."
The case was handled by Trial Attorney Paulina Stamatelos and Assistant Director Zachary Dietert from the Civil Division’s Consumer Protection Branch, along with Assistant U.S. Attorney Ekta Dharia for the Northern District of California and Abdiel Lewis and Evan Rose from the FTC’s Bureau of Consumer Protection.
For further details on consumer protection efforts by these agencies, visit their respective websites at www.justice.gov/civil/consumer-protection-branch and www.FTC.gov.
