Uber will be paying $20 million as a settlement for the complaint brought forward by the Federal Trade Commission on the company's alleged misleading of its drivers on how much they can earn and the possible financing for vehicles.
The ride-sharing service has not admitted to any wrongdoing but has agreed to pay the amount for the FTC to drop its charges.
FTC Allegations Against Uber
The FTC alleged that Uber exaggerated the earnings that people who sign up as drivers for the ride-sharing service can earn. The company did so to attract more drivers to the platform, but once they started receiving their paychecks, the drivers found out that their earnings were significantly less than what Uber had promised in its online advertisements.
In the official complaint lodged by the FTC against Uber, it included a table that contained information on the advertised hourly fare on Craigslist for several cities, along with the percentage of Uber drivers in that city who were averaging the quoted hourly fare for their earnings. In Boston, Minneapolis, and Philadelphia, for example, the advertised hourly fare were $25, $18, and $25, respectively, but in all three cities, less than 10 percent of drivers were averaging the promised earnings.
The FTC also claimed that Uber made promises to provide its drivers with the best possible financing options so that they can own or lease a vehicle under the so-called Vehicle Solutions Program. However, the rates that were provided to the drivers turned out to be worse compared to the ones that consumers with similar credit scores can obtain. In addition, Uber did not check the payments that drivers were making under the program, with the cost reaching averages of over $200 per week. The program also promised unlimited mileage for leased vehicles, but drivers were actually limited to only 40,000 miles per year.
This issue, however, might have already been addressed, as Uber ended its partnership with the auto loan division of Banco Santander, which was later accused of dealing subprime vehicle financing loans.
What Now For Uber?
"We're pleased to have reached an agreement with the FTC," said a spokesperson for Uber, adding that the ride-sharing service has implemented several initiatives to improve the experience of its drivers over 2016. The spokesperson added that the company will continue to make sure that Uber remains the best option for people who would like to earn money in their own time.
In addition to the $20 million settlement, Uber has agreed to refrain from posting false advertisements regarding how much drivers can earn and the terms and conditions for the company's drivers to avail financing or leasing options for vehicles.
Uber also agreed to send the FTC semi-regular compliance reports on the matter, including information on driver earnings and marketing material.
Uber Controversies Continue
Uber has been no stranger to controversy over the history of the ride-sharing service, especially as it clashed with regulators on various issues.
Uber, along with rival Lyft, officially responded to allegations on discrimination concerns late last year, including that African-American riders often had to wait longer for rides, and the trips of woman passengers were longer.
The ride-sharing service was also recently forced to pull out their self-driving cars from being tested in San Francisco by the California Department of Motor Vehicles, transferring the testing to Arizona.