WASHINGTON — Uber Technologies Inc. agreed Thursday to pay $20 million to resolve Federal Trade Commission allegations that it misled drivers about potential earnings and vehicle financing.
The consumer protection agency alleged that Uber exaggerated the amount of money drivers typically could earn in nearly 20 cities.
It said Uber claimed on its website that median annual driver income topped $90,000 in New York, for example, and was more than $74,000 in San Francisco.
Less than 10 percent of drivers in those areas made that much, the commission alleged.
Uber also advertised on Craigslist hourly earnings rates that it said drivers could achieve in a host of cities, including $25 an hour in Boston and $18 an hour in Minneapolis. Those claims were overstated, the FTC alleged, with fewer than 30 percent of drivers in most of those urban areas making the promised rate.
Many workers participating in the so-called sharing economy as contractors rather than full-time workers quickly learn that the promise of high wages doesn’t often match reality. Companies frequently include in their wage estimates expectations of tips from customers or aggressive goals that are rewarded with cash bonuses.
Further, companies like Uber, grocery-delivery service Instacart Inc. and micro-gig site TaskRabbit Inc. leave expenses like car insurance, fuel and vehicle upkeep to the contract workers in exchange for flexible hours.
Uber has faced several lawsuits over what drivers say are insufficient wages and benefits and is fighting a provision in Seattle that will allow workers there a vote to unionize. Drivers’ wages can fluctuate based on customer demand or the use of Uber’s carpooling service, which are largely beyond workers’ control.
In its suit, the FTC also claimed that Uber pledged to provide drivers with the best-available financing options to own or lease a car, but that the rates drivers received were worse than those that could be obtained by consumers with similar credit scores. Uber failed to monitor or control the terms of the financing agreements it offered through agreements with lenders, the FTC said.
The FTC lawsuit and settlement were filed in a San Francisco federal court. The company didn’t admit nor deny the allegations as part of the settlement.
“We’re pleased to have reached an agreement with the FTC,” an Uber spokesman said. “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 case was the latest in a flurry of actions by the FTC during its final days of Democratic control. The commission is currently comprised of two Democrats and one Republican, with two other seats vacant.
The Democrats, outgoing Chairwoman Edith Ramirez and Commissioner Terrell McSweeny, voted in favor of the case. Republican Maureen Ohlhausen, who is poised to become the acting head of the agency after President-elect Donald Trump takes office, dissented.
Ms. Ohlhausen said the $20 million settlement exceeded “the best estimate of actual consumer harm” that Uber’s alleged violations caused.
Uber and rival Lyft Inc. both have a plan to forestall further worker pushback over wages: self-driving vehicles. Fully autonomous cars will be many years in development, but if successful promise to save multimillions in wages by eliminating drivers.
