Uber is said to pay $20 million as a settlement in a lawsuit filed by the US Federal Trade Commission. The lawsuit comprised allegations that the ride-hailing company made false promises regarding earnings of their recruited drivers and also their car leasing program.
The settlement agreement was announced last Thursday. The statements covered in the FTC lawsuit were made from late2013 until 2015. This was at the time when Uber was at its peak in recruiting drivers in order to expand its services and compete with its rival Lyft.
The FTC alleged that Uber publicly mislead its drivers from 20 cities regarding the amount that they could earn. Such that according to Uber, drivers could rake in as much as $90,000 annually for New York City while drivers in San Francisco could earn as much as $74,000 annually.
Uber to pay $20 million to FTC to settle claims that it exaggerated how much drivers would make https://t.co/bo3spGDphR #business #intel pic.twitter.com/tlUziPsoS4
— SocialFloTribute (@danavilcea) January 19, 2017
In fact, from FTC's investigation, the midrange income for NYC drivers was almost one-third less compared with what Uber CEO Travis Kalanick boasted on their website. Also, San Francisco drivers' income was 28% less, as reported by CNBC.
Part of the lawsuit filed by the FTC is Uber's car leasing program, wherein the company promised drivers that they would offer the best financing options to lease or own a car. However, it turns out that the car leasing rates drivers received were far worse compared with those obtained by other car owners with almost the same credit option.
The Verge reported that Uber cut off ties with the auto loan division of Banco Santander in 2015. Later, Banco Santander was accused of issuing subprime loans for vehicle financing.
Further, despite Uber agreeing to a settlement, the company did not admit to any wrongdoing. The $20 million will be distributed among the drivers that were affected. Also, semi-regular compliance reports are to be issued by the company to FTC, as part of the settlement agreement. This is inclusive of driver's earning reports and marketing materials.
Meanwhile, Matt Kallman, Uber spokesman, wrote a statement in an email that the San Francisco-based company has made improvements to the driver experience over the past year. Also, they will further focus on ensuring "that Uber is the best option for anyone looking to earn money on their own schedule."
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