After the Federal Trade Commission (FTC) filed a lawsuit against Lyft, claiming the company used deceptive advertising practices to mislead drivers about their potential earnings, the rideshare giant has agreed to a proposed settlement.
The lawsuit, filed by the U.S. Department of Justice (DOJ) on behalf of the FTC, cites misleading claims regarding driver pay and promises of “earnings guarantees” that failed to deliver what drivers expected.
According to the FTC, Lyft misled potential drivers during increased demand in 2021 and 2022. Advertisements from Lyft touted impressive hourly earnings—up to $33 in Atlanta,
$41 in Portland, and $43 in Los Angeles. However, based on the top 20% of drivers’ earnings, these figures did not represent what most drivers could expect. The complaint states that average earnings were inflated by as much as 30% and often included tips, though many drivers assumed tips would be in addition to hourly pay.“It is illegal to lure workers with misleading claims about how much they will earn on the job,” FTC Chair Lina M. Khan said. “The FTC will keep using all its tools to hold businesses accountable when they violate the law and exploit American workers.”
The lawsuit also addressed Lyft’s advertising of “earnings guarantees,” promising set payouts if drivers completed specific rides within a time frame. For example, Lyft advertised that drivers could make $975 for 45 rides over a weekend. However, many drivers reported disappointment upon realizing the earnings guarantee would only cover the difference between their actual pay and the advertised amount. The FTC noted that complaints flooded in from drivers who assumed the guarantee was a bonus, not merely a supplement to regular earnings.
As part of the proposed settlement,
Lyft has agreed to ensure that its pay claims reflect typical driver earnings. Lyft will also be prohibited from including tips as part of advertised hourly earnings and must communicate to drivers that guarantees are meant to bridge shortfalls rather than serve as bonuses. Lyft must keep accurate evidence of its pay statements moving forward to back these claims.The settlement includes a $2.1 million civil penalty and mandates that Lyft notify drivers about the revised policy. The action is part of a broader FTC initiative to protect gig economy workers from false earnings claims. The FTC has also taken action against Amazon, HomeAdvisor, Arise, and Care.com, securing millions in redress and conduct relief for aggrieved workers.
The FTC’s vote to authorize the DOJ to file the complaint in U.S. District Court for the Northern District of California passed with a 3-2 majority.
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