Uber to pay $20 million to settle exaggerated earnings claims

The settlement will provide refunds to drivers across the U.S.

Despite its growing popularity among consumers, Uber has seen its share of legal confrontations over the past couple of years. In the last month alone, the company was ordered to take its self-driving cars off the road in California and incurred the ire of Senator Al Franken over its privacy policy.

Now, the company will pay $20 million to the Federal Trade Commission (FTC) over charges of misleading drivers. The agency says Uber exaggerated about the amount of money drivers could earn while operating in certain cities and how much financing was available under its Vehicle Solutions Program. The $20 million will go towards refunding affected drivers across the U.S.

“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,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.

False claims and promises

The FTC points to claims made by Uber on its website about the amount of money UberX drivers could make in certain U.S. cities. The company had proclaimed that drivers’ annual median income was over $90,000 in New York City and more than $74,000 in San Francisco, but the real numbers were actually much lower.

The agency says that the actual annual median income was $61,000 in New York City and $53,000 in San Francisco. Less than 10% of drivers in either city actually earned the inflated numbers that Uber posted on its website, the agency said. Further, the FTC charges that Uber made inflated hourly earnings claims in job listings on sites like Craiglist, but the average driver in cities across the country weren’t able to earn those amounts.

Additionally, the agency takes umbrage with claims Uber made about its Vehicle Solutions Program, which is meant to provide drivers with the “best financing options available,” regardless of credit history. Uber proclaimed that drivers could “own a car for as little as $20/day” or could lease a car for “payments as low as $17 per day.” However, the FTC says that from late 2013 to April of 2015, drivers paid median weekly purchase and lease payments of $160 and $200, respectively.

Uber also allegedly failed to follow through on its promises in auto financing agreements, and drivers were left with worse rates than other drivers with similar credit histories. The company claimed that drivers could lease cars with unlimited mileage through the program as well, when, in fact, the agreements came with mileage restrictions.

What to do

In addition to paying $20 million, the settlement forbids Uber from misrepresenting drivers’ earnings or details about its Vehicles Solution Program.

The FTC will be depositing the $20 mllion into an equitable relief fund that will be used to compensate affected consumers. You can learn more about how the FTC will be distributing the refund by visiting its site here.

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