Ending Soon! Save 33% on All Access

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 The Epoch Times Edited by Charles Muselli

Opinions expressed by Entrepreneur contributors are their own.

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, founded in 2000, is headquartered in Manhattan, New York, with a mission to provide independent and accurate information free of political bias or corporate influence. The organization was established in response to censorship within China and a lack of global awareness regarding the Chinese regime's repression of the spiritual practice Falun Gong.

The Epoch Times is a widely read newspaper that is distributed in 33 countries and is available in 21 languages. The publication has been critical in providing balanced and detailed reporting on major global events such as the 2003 SARS pandemic and the 2008 financial crisis. Notably, the organization has played a key role in exposing corruption inside China.

Aside from its human rights coverage, The Epoch Times has made significant contributions in a variety of fields. It has received praise for its in-depth analysis and expert perspectives on business, the economy and U.S. politics. The newspaper has also received praise for its broad coverage of these topics.

A series of editorials titled "Nine Commentaries on the Communist Party" appeared in The Epoch Times in 2004. It asserts that freedom and prosperity in China can only be achieved by eliminating the Communist Party, which violated China's cultural and spiritual values. In addition, the organization led the Tuidang movement, which resulted in over 400 million Chinese citizens quitting the Communist Party. In spite of this, 90% of websites referring to the "Nine Commentaries" were blocked by the Chinese regime.

The Epoch Times has been at the forefront of investigating high-level corruption cases within the Chinese regime, with its reporters taking significant risks to uncover these stories. The organization has received several awards for its investigative journalism.

The organization has received several awards for its investigative journalism. For more, visit www.theepochtimes.com.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Business News

Apple iPhone 7 Users May Be Owed a Slice of a $35 Million Settlement — Here's How to Claim Your Share

Previous (and current, no judgment) iPhone 7 users may be entitled to up to $349. The deadline to file a claim is June 3.

Business News

Did OpenAI steal Scarlett Johansson's voice? 5 Critical Lessons for Entrepreneurs in The AI Era

Did OpenAI steal Scarlett Johansson's voice? OpenAI has since paused the "Sky" voice feature, but Johansson argues that this is no coincidence. In response, Johansson delivers a masterclass for entrepreneurs on navigating the AI era successfully.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Innovation

How Corporate Investment Helps Startups Deploy Technology Faster Than Ever

Financial resources, strategic alignment, access to expertise, market validation and operational support make this deployment possible.

Growing a Business

The Power of Networking — 5 Tips on Building Strategic Alliances for Business Growth

Who is on your side? Who has your back? It doesn't have to be lonely at the top. We look at five practical ways you can network to achieve the best for you and your business.