Uber has agreed to hand over $20 million to settle claims that it misled drivers about how much money they could expect to make working for the ride-hailing service and how much it cost to buy or lease a car through the company.
The charges were brought by the Federal Trade Commission on behalf of Uber drivers. The FTC will now distribute the $20 million to drivers affected by Uber's reportedly bogus claims. Additionally, Uber is now prohibited from making false, misleading or unsubstantiated statements about drivers' income.
"We're pleased to have reached an agreement with the FTC," an Uber spokesman said in an email. "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."
Uber is one of the biggest ride-hailing services in the world with operations in more than 450 cities in more than 70 countries. More than one million people drive for Uber, but the relationship between the company and its drivers isn't always copacetic. Uber drivers have staged protests, filed lawsuits and voiced their concerns that their pay is too low.
Uber has said that drivers can make up to $30 per hour, but most drivers say they make far below that number. A November study by Jonathan Hall, an Uber employee and shareholder, says that Uber drivers make on average $20.19 per hour. But in urban areas, like Detroit, Houston and Denver, drivers make less than $13.25 per hour on average, according to a June report by Buzzfeed News.
The FTC also says drivers make far less than what Uber claims. In the agency's complaint, it says Uber claimed drivers could make $90,000 per year in New York and $74,000 in San Francisco, when actually those numbers were lower. The FTC says drivers actually made on average $61,000 in New York and $53,000 in San Francisco. The FTC alleges that Uber tried to lure in new drivers by exaggerating how much they could earn.
"When Uber's promised earnings have not materialized, and drivers have attempted to cancel their auto agreements, they have incurred significant monetary harm," the FTC wrote in its complaint. "Uber's practices have caused its drivers to suffer millions of dollars of injury."
Another component to the FTC's complaint is about Uber's vehicle financing program. The agency claims that Uber said it would provide drivers with the "best financing options available" and that they could own a car for as little as $140 per week or lease a car with payments as low as $119 per week.
However, the financing program reportedly turned out to be more expensive for drivers. Weekly payments for a car purchase averaged more than $160 per week and weekly payments for vehicle leasing averaged more than $200 per week, according to the FTC. For this financing program Uber outsourced to a company named Banco Santander, which it no longer uses.
"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," Jessica Rich, director of the FTC's Bureau of Consumer Protection, said in a statement. "This settlement will put millions of dollars back in Uber drivers' pockets."