Uber to Pay $20 Million in FTC Settlement Over False Ads

  • Diana Asatryan
  • January 20, 2017
  • 0

It’s hard to keep up with all the new ride-hailing startups these days, and not just for consumers, but for drivers as well.

With increased competition, rideshares are coming up with their own strategies to attract drivers. But, as the Federal Trade Commission proved yesterday, posting false potential earnings ads should not be one of them.

Uber agreed to pay $20 million to settle FTC’s allegations that the rideshare giant misled drivers with ads of inflated potential earnings and understated financing costs.

According to the agency, Uber claimed on its website that uberX drivers’ annual median income was more than $90,000 in New York and over $74,000 in San Francisco. The drivers’ annual median income, however, turned out to be $61,000 in New York and $53,000 in San Francisco, and less than 10% of all drivers in those cities earned the yearly income Uber had advertised.

In addition, drivers were promised the “best financing options available” through Uber’s Vehicle Solutions Program, regardless of the driver’s credit history, with lease payments as low as $119/week. However, the FTC found that the median weekly lease payments exceeded $200, and “in fact, its drivers received worse rates on average than consumers with similar credit scores typically would obtain. In addition, Uber claimed its drivers could receive leases with unlimited mileage through its program when in fact, the leases came with mileage limits,” the FTC said in a statement.

The $20 million will be used to provide refunds to affected drivers across the country, the FTC said. The settlement details can be accessed here.

In a standoff for the ultimate rideshare platform, it’s no wonder that Uber has been losing marketshare to newcomers, who, you know, don’t drive their employees to protest for fair wages. Via, for example, pays an hourly wage to its drivers. Also, Via takes only about 7% commission on cars that can carry up to four passengers and about 2% on those that can hold five, as opposed to Uber’s 25% to 30% commission. 

 

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