Uber is paying $20 million for tricking people into driving.
The agreement announced Thursday with the Federal Trade Commission covers statements Uber made from late 2013 until 2015 while trying to recruit more drivers to expand its service and remain ahead of its main rival, Lyft.
The FTC alleged that most Uber drivers were earning far less in 18 major U.S. cities than Uber published online. Regulators also asserted that drivers wound up paying substantially more to lease cars than the company had claimed.
“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,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection.
Uber didn’t admit or deny culpability to the claims, and waived rights to challenge the settlement, according to court filings. As a condition of the settlement, Uber has to submit a compliance report next year detailing its advertising, marketing, and sales activities with explanation of how it complied with the order.
A company spokesperson told the Verge, “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 $20 million settlement is the latest legal challenge in Uber’s ongoing fight with its drivers. The ride-hailing company, along with its competitor Lyft, have been tangling with driver complaints that their employment status is misclassified as contractors rather than employees. In September, Uber tried to settle a class-action suit for those complaints but a judge rejected the company’s $100 million offer as insufficient.
Uber also exaggerated the average hourly earnings of its drivers in 16 other U.S. cities and Orange County in California, according to the FTC’s complaint.
Regulators also blamed Uber for referring drivers to car financing programs that charged more than the company had promised.
The FTC approved the settlement in a 2-1 vote. The dissenting voter, FTC Commissioner Maureen Ohlhausen, objected because she didn’t believe Uber’s actions harmed consumers.
For instance, in a statement published on Uber’s website from May 2015 through August 2015, Chief Executive Travis Kalanick boasted that the mid-range annual incomes of the service’s New York city drivers exceeded $90,000 and the mid-range annual earnings of its San Francisco drivers topped $74,000, according to the FTC. The agency’s investigation determined that the actual mid-range income for the New York drivers was nearly one-third less, at $61,000, and 28% less in San Francisco, at $53,000, during the year leading up to Kalanick’s statement.
In August 2015, Uber revised its statement to specify its estimates reflected drivers’ “potential” incomes in those two cities. The FTC says less than 10% of Uber drivers in New York and San Francisco hit the income levels circulated by the company.
Additionally, Uber drivers worldwide continue to protest its fare cuts, claiming that it eats into their earnings and makes it hard for full-time drivers to earn a living.
Uber has had to settle similar suits over its wording in advertisements to consumers. A judge rejected Uber’s $28.5 million settlements in September for two class-action suits over the company charging a fee for “safe rides,” which covered background checks, and mischaracterizing the company’s safety practices. Uber was also ordered to repay $47,000 customers a total of $374,000 for charging a 20 percent gratuity that was supposed to be included in the fare.