The Federal Trade Commission (FTC) sued Uber alleging that it “misled prospective drivers with exaggerated earning claims and claims about financing through its Vehicle Solutions Program.” The January 19, 2017 lawsuit filed in the US District Court for the Northern District of California FTC v. Uber Technologies, Inc. requested a permanent injunction and includes claims violations of Section 5 of the FTC Act for: Deceptive Income Claims, Deceptive Auto Finance Claims, and Deceptive Unlimited Mileage Claims. The FTC News Release entitled “Uber Agrees to Pay $20 Million to Settle FTC Charges That It Recruited Prospective Drivers with Exaggerated Earnings Claims” included these allegations in about the lawsuit:
The FTC alleges that Uber claimed on its website that uberX drivers’ annual median income was more than $90,000 in New York and over $74,000 in San Francisco.
The FTC alleges, however, that drivers’ annual median income was actually $61,000 in New York and $53,000 in San Francisco. In all, less than 10 percent of all drivers in those cities earned the yearly income Uber touted.
The FTC also alleges that Uber made high hourly earnings claims in job listings, including on Craigslist, but that the typical Uber driver failed to earn those advertised hourly amounts in various cities.
The complaint also alleges that Uber claimed its Vehicle Solutions Program would provide drivers with the “best financing options available,” regardless of the driver’s credit history, and told consumers they could “own a car for as little as $20/day” ($140/week) or lease a car with “payments as low as $17 per day” ($119/week), and “starting at $119/week.”
Despite Uber’s claims, from at least late 2013 through April 2015, the median weekly purchase and lease payments exceeded $160 and $200, respectively, the FTC alleges.
Uber failed to control or monitor the terms and conditions of the auto financing agreements through its program and in fact, its drivers received worse rates on average than consumers with similar credit scores typically would obtain, according to the FTC’s complaint.
In addition, Uber claimed its drivers could receive leases with unlimited mileage through its program when in fact, the leases came with mileage limits, the FTC alleges.
Jessica Rich (Director of the FTC’s Bureau of Consumer Protection) made these comments in the News Release:
Many consumers sign up to drive for Uber, but they shouldn’t be taken for a ride about their earnings potential or the cost of financing a car through Uber.
This settlement will put millions of dollars back in Uber drivers’ pockets.
Uber’s confession is significant and hopefully will influence other companies who make fraudulent claims to potential workers.