Uber Agrees to $20M Settlement After Claim it Falsely Advertised High Income to 'Entice' Potential Drivers

The Federal Trade Commission recently filed a complaint against popular ride-hailing app Uber for posting inflated yearly wages on various job-seeking websites, which "enticed numerous consumers to become Uber drivers" under false pretenses, according to the FTC. Uber isn't fighting the allegations placed against it, and has instead this week quickly agreed to a settlement deal in the way of paying $20 million as equitable relief to the FTC.

As reported by BuzzFeed News, the FTC's complaint explains that from May 2014 through August 2015 Uber published a statement on its website which included various annual earning rates for its drivers. In the post the company mentioned that for UberX drivers the "median income is more than $90,000/year/driver in New York and more than $74,000/year/driver in San Francisco."

According to the FTC, the truth is that the median income is $29,000 less than Uber claimed in New York, and $21,000 less in San Francisco, specifically when looking at hours locked to a standard 40-hour work week. In total, less than 10 percent of drivers in New York and San Francisco have reached Uber's $90,000 and $74,000 yearly income claim, respectively.

"To induce individuals to become Uber Drivers, Uber has advertised and marketed the earning potential of its Drivers on Craigslist, its company website, and other advertising and marketing media. Uber has publicized high annual and hourly earnings to entice consumers to become Uber Drivers. However, once Drivers have begun to receive their paychecks, Drivers have discovered their actual earnings were substantially less than Uber has claimed."

The complaint specifically mentions a collection of job postings published by Uber in cities across the United States, all backing Uber's inflated earnings rate that the FTC sees as a false tactic to get drivers onto the service.

Uber also has "made numerous claims" regarding the cheap cost and unlimited mileage of its Vehicle Solutions Program, which lets drivers buy or lease a car they can use to drive for Uber. According to the FTC's complaint, the company "has had no basis with which to make these claims," saying that Uber has had zero oversight or even monitored the terms and conditions of any driver entering into the Vehicle Solutions Program.

"Further, Drivers in Uber's Vehicle Solutions Program - which has connected Drivers with subprime auto companies and dealers - have in many instances received worse than industry average rates, made payments for hundreds of dollars more per month than advertised, and entered into leases imposing costs for mileage."

Uber CEO Travis Kalanick has acknowledged the FTC's complaint in the settlement agreement, and a company spokesperson said the following in a statement:

“We’re pleased to have reached an agreement with the FTC,” an Uber spokesperson said in a statement. “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.”

The ride-hailing company has hit a few rocky patches over the past few months, most recently hearing concerns from users after an update introduced background GPS tracking that follows a rider up to five minutes after their trip ends and even if the app is closed. A company spokeswoman told BuzzFeed News in December that one of the biggest advantages of the five minute tracking update is that it "could also help customer service representatives investigate complaints or safety issues" raised by users following a ride.