A landmark settlement has been reached between ride-hailing giant Lyft and US authorities, following allegations of misleading advertisements. The US Justice Department and the Federal Trade Commission (FTC) had filed a lawsuit against Lyft, claiming the company made false and deceptive claims in its ads from 2021 to 2022. During this time, COVID-19 lockdowns had lifted, and the demand for rides surged.
Lyft had touted drivers could earn up to $43 an hour in certain areas, but these claims were based on the earnings of its top performers. The FTC argued that the company’s published rates were not representative of average driver earnings, and inflated actual earnings by as much as 30 percent. Furthermore, Lyft allegedly failed to disclose that the figures included tips from passengers.
The company’s ads also promised drivers guaranteed earnings if they completed a set number of rides within a specific timeframe. For instance, a driver was promised $975 for completing 45 rides over a weekend. However, the FTC claimed that Lyft did not clearly explain that it would only pay the difference between the driver’s actual earnings and the guaranteed amount.
Despite being notified of its concerns by the FTC in October 2021, Lyft allegedly continued to make deceptive earnings claims. The company launched an earnings dashboard last month, showing estimated hourly rates and daily, weekly, and yearly earnings for each ride. As part of the settlement, Lyft will now have to explicitly disclose potential take-home pay based on typical earnings, rather than inflated figures. Tips will be excluded from calculations, and drivers will be clearly informed that the guaranteed earnings promise only applies to the difference between their actual earnings and the promised amount. Lyft will also pay a $2.1 million civil penalty as part of the settlement.
