Subscribe to Entrepreneur for $5
Subscribe

Amazon Drivers to Receive Nearly $60 Million in Withheld Tips After Tech Giant Reaches Settlement With FTC

The FTC brought a lawsuit against Amazon and its subsidiary, Amazon Logistics, in 2021, claiming that the e-commerce company had not fully paid tips to drivers in its Amazon Flex program.

By
This story originally appeared on The Epoch Times

More than 140,000 Amazon drivers will receive nearly $60 million in withheld tips after the company reached a settlement with the the Federal Trade Commission (FTC) on Tuesday.

The funds will serve as reimbursement for tips that Amazon allegedly illegally withheld from drivers over a two-and-a-half year period between 2016 and 2019, the FTC said in a statement.

The FTC brought a lawsuit against Amazon and its subsidiary, Amazon Logistics, in 2021, claiming that the e-commerce company had not fully paid tips to drivers in its Amazon Flex program.

Drivers in the Amazon Flex program use their own vehicle to deliver packages and groceries ordered through programs such as Prime Now and AmazonFresh, allowing customers to give the drivers a tip.

The lawsuit claimed that the company regularly advertised that drivers in the program could earn anything between $18–25 per hour for delivering goods to customers and that Amazon told drivers they would receive 100 percent of the tips they earned while delivering with Amazon Flex.

Amazon also told its customers that 100 percent of the tips would go to drivers, too, the FTC said.

However, the FTC in its lawsuit claimed that Amazon had instead been practicing a tip-stealing scheme and had kept drivers’ tips over a two-and-a-half year period, only stopping its behavior after it became aware of the FTC’s investigation in 2019.

The FTC’s lawsuit claims that in late 2016, Amazon instead began paying its Flex program drivers a lower hourly rate, without first consulting its drivers. It then used the customer tips to make up the difference between the new lower hourly rate and the promised rate, resulting in more than $61.7 million in tips missing from drivers’ pockets, the FTC said.

Amazon reportedly received hundreds of complaints from drivers over the missing tips and uninformed pay change but returned the complaints with form e-mails “falsely claiming that Amazon was continuing to pay drivers 100 percent of tips,” the FTC said.

However, it continued practicing the tip-stealing scheme until August 2019 when the FTC notified it of its investigation into the company. It then began utilizing a pay model of rewarding drivers with an identified base amount plus 100 percent of tips and provided its drivers with a breakdown of both their pay and the tips.

The Epoch Times has contacted Amazon for comment.

Amazon reached the settlement with the FTC in February, agreeing to pay a total of $61,710,583, which represents the full amount that Amazon allegedly withheld from drivers.

The FTC said the settlement also “prohibits Amazon from misrepresenting any driver’s likely income or rate of pay, how much of their tips will be paid to them, as well as whether the amount paid by a customer is a tip.”

Amazon will now be unable to make any changes as to how their drivers’ tips are used as compensation without first consulting the driver and getting their full consent.

Daniel Kaufman, acting director of the FTC’s Bureau of Consumer Protection praised Tuesday’s settlement.

“Rather than passing along 100 percent of customers’ tips to drivers, as it had promised to do, Amazon used the money itself,” Kaufman said. “Our action today returns to drivers the tens of millions of dollars in tips that Amazon misappropriated, and requires Amazon to get drivers’ permission before changing its treatment of tips in the future.”

The FTC will send 139,507 checks and 1,621 PayPal payments to Amazon Flex drivers, while those drivers who had tips totaling more than $5 withheld by Amazon will receive the full amount of their withheld tips. The average amount that drivers will receive is $422 and the highest amount going to a single Amazon Flex driver is more than $28,000, Reuters reported

By Katabella Roberts

 

Katabella Roberts is a reporter currently based in Turkey. She covers news and business for The Epoch Times, focusing primarily on the United States.

The Epoch Times

Written By

The Epoch Times is the fastest-growing independent news media in America. We are nonpartisan and dedicated to truthful reporting.

We are free from the influence of any government, corporation, or political party—this is what makes us different from other media organizations. Our goal is to bring our readers accurate information so they can form their own opinions about the most significant topics of our time.

We don’t follow the unhealthy trend of agenda-driven journalism prevalent in today’s media environment. Instead, we use our principles of Truth and Tradition as our guiding light. We highlight in our reporting the best of humanity, the valuable lessons of history, and traditions that are beneficial for society.

The Epoch Times was founded in the United States in the year 2000 in response to communist repression and censorship in China. Our founders, Chinese-Americans who themselves had fled communism, sought to create an independent media to bring the world uncensored and truthful information.

The Epoch Times has received numerous awards for our reporting and design, including from the New York Press Association, the Society of Professional Journalists, and the Society for News Design.

The Epoch Times’ media network currently covers 21 languages and 33 countries.