Lyft has agreed to tell its drivers how much they can really earn on the ride-hailing platform — and back it up with evidence — as part of a settlement of a lawsuit filed by the U.S. Department of Justice and the Federal Trade Commission. The lawsuit accused the company of making “numerous false and misleading claims” in ads released in 2021 and 2022, when ride demand improved following lockdowns in previous years.
The FTC said Lyft promised drivers up to $43 an hour in some locations without disclosing that these numbers were based on the earnings of its top drivers. The rates it published allegedly did not represent drivers’ average earnings and inflated actual earnings by as much as 30 percent.
In addition, the FTC said Lyft “failed to disclose” that information, as well as the fact that the amounts it published included passengers’ tips. The company also promised in its ads that drivers would be paid a certain amount if they completed a certain number of rides within a certain time frame. For example, if a driver completes 45 rides over the weekend, he or she should earn $975.
Lyft reportedly did not make it clear that it would only pay drivers the difference between their earnings and the guaranteed income it promised. Drivers thought they were getting guaranteed payments in addition to their ride payments as a bonus for completing a certain number of rides.
The FTC accused Lyft of continuing to make “deceptive income claims” even after it sent the company a notice about its concerns in October 2021.
Earlier this month, the company launched an earnings dashboard that showed a driver’s daily, weekly, and annual earnings, as well as an estimated hourly rate for each ride. But under the settlement, Lyft must clearly tell drivers what their potential take-home pay is, based on normal earnings, not inflated earnings.
It must remove tips from the equation, and it must make clear that it will only pay drivers the difference between the money they receive from rides and its guaranteed income promise. Finally, it must pay a $2.1 million civil penalty.
The Federal Trade Commission has taken action against General Motors and OnStar for allegedly sharing information about drivers with third parties without their consent. The agency launched an investigation into the automotive company after The New York Times found that GM collected data about customers’ vehicle use and sold it to a third-party platform used by insurance companies.
The information came from the OnStar Smart Driver program, which customers with GM vehicles were encouraged to participate in or didn’t know they had agreed to join.
The program collected data about behaviors such as hard braking, late-night driving and speeding and allegedly sold the information to LexisNexis Risk Solutions and Verisk, which in turn sold that data to insurance companies. Shortly after the Times report, GM said it had stopped sharing sensitive information with the two data brokers.
Today, the FTC proposed a settlement under which both GM and OnStar would be barred for five years from disclosing consumers’ geolocation and driver behavior data to consumer reporting agencies. These companies would also be ordered to take additional steps to increase transparency and choice for customers about the information they collect and share.
“GM monitored and sold people’s precise geolocation data and driver behavior information, sometimes as often as every three seconds,” said FTC Chairwoman Lina M. Khan. “With this action, the FTC is protecting Americans’ privacy and shielding people from unchecked surveillance.”