Uber to pay $20m to 'misled' drivers

Between January and March 2015, ride-sharing service
Uber put out ads on Craigslist in the hope of attracting
new drivers by offering attractive hourly rates of pay.
In Boston, for example, it told potential drivers they
would earn $25 an hour.

In truth, fewer than 10% of drivers in the city actually
managed to bring in that amount, according to a
lawsuit brought by the US Federal Trade Commission.
In separate statements pushed out to the media and
posted on its own site, Uber said “the potential income
a driver on UberX can make in a year is more than
$90,000 in New York and more than $74,000 in San
Francisco”.
The FTC said the median amount earned in those
cities - for drivers working a 40 hour week - was
significantly less ($29,000 and $21,000 less,
respectively).
The FTC listed 18 cities across the US where it said
Uber was painting a far more lucrative picture than was
realistic. In Baltimore, fewer than 20% of drivers earned
$16 an hour. Chicago - fewer than 20% earned $21.
Minneapolis - 10%, $18. And so on.
'Cost, risk and burden'
On Thursday, Uber agreed to pay $20m to those drivers
in order to settle the claim. Quite how it will do that it
isn’t yet clear, but the FTC has ordered the company
to work with it to find a way.
The company said its settlement didn’t constitute an
admission of guilt, disputing the way the FTC
calculated its figures.
The company said it has modified the way in which it
advertises potential earnings to new recruits - but
would not go into further detail.
"We’re pleased to have reached an agreement with the
FTC,” a spokeswoman said.
"We’ve made many improvements to the driver
experience over the last year and will continue to focus
on ensuring that Uber is the best option for anyone
looking to earn money on their own schedule.”
Drivers complain, however, that the improvements to
the driver experience do not extend to covering the
costs of running and maintaining a car.
"The reality of being a ride-sharing driver is a far cry
from the rosy picture these apps describe and it is
encouraging to see the FTC take them to task and
refund drivers,” said Jim Conigliaro from the
Independent Drivers Guild.
"Companies like Uber shift cost, risk, and burden onto
drivers and taxpayers when they fail to provide the
basic benefits so many Americans take for granted,
from health insurance to sick leave.
"On top of that, drivers are stuck with the bill for their
vehicle, gas, repairs, maintenance, insurance, the list
goes on.”
The FTC also criticised Uber over the financing options
it gave to drivers interested in leasing a car via the
company.
The regulator said drivers were paying an average of
$200 per week - higher than first advertised. Money to
pay the lease is automatically taken from a driver’s
earnings.