Justice Department and FTC Probe Leads to Lyft Agreement Over Driver Earnings Advertising
Ride-hailing giant Lyft has agreed to pay $2.1 million to settle a federal lawsuit alleging it misrepresented the potential earnings of drivers during the post-pandemic recovery period. The settlement resolves accusations that Lyft advertised inflated hourly pay rates in major U.S. cities, deceiving drivers about realistic earnings, according to the U.S. Justice Department.
Settlement Reached in San Francisco Court
The case, filed by the U.S. Justice Department on October 25 in San Francisco federal court, was resolved just over a week later, with U.S. Magistrate Judge Peter Kang signing off on the agreement. Lyft disclosed the settlement terms the same day the lawsuit was filed, indicating that negotiations had been underway with the Federal Trade Commission (FTC) over similar concerns.
Lyft Banned from Advertising Inflated Earnings
Under the settlement, Lyft has agreed to cease practices deemed misleading by federal authorities. The Justice Department and FTC investigation revealed that between April 2021 and June 2022, Lyft advertised hourly earnings of over $40 in cities like San Francisco, Los Angeles, and Boston, and above $30 in cities such as Atlanta and Miami. The lawsuit claimed these figures were based on earnings from the top 20% of drivers, making them unrealistic for the majority of drivers.
Statement from the Justice Department
In a statement on Friday, Principal Deputy Assistant Attorney General Brian M. Boynton emphasized the importance of accurate information in the gig economy, saying, “The Justice Department will vigorously enforce the law to stop companies from misleading Americans about their potential earnings.” Lyft’s advertised hourly rates allegedly left many drivers unable to meet the promised earnings, fueling the federal case.
Lyft’s Response and New Leadership
Lyft, under the leadership of CEO David Risher, who took the helm last year, stated it has since adjusted its advertising practices to avoid further issues. “We agreed to this settlement because we recognize the importance of transparency in maintaining trust in the communities we serve,” Lyft said in a statement.
