Amazon has agreed to pay $3.95 million to settle a lawsuit alleging the company stole tips from its delivery drivers to subsidize labor costs. The Attorney General of Washington, D.C. accused Amazon of misleading consumers between 2016 and 2019 by promising that all tips would go to drivers.
Amazon has agreed to pay $3.95 million to settle a lawsuit in which it was accused of subsidizing its labor costs by stealing the tips its drivers received to cover part of the employees’ base wages, D.C. Attorney General Brian L. Schwalb announced Friday. According to Schwalb, Amazon misled consumers in Washington, D.C., between 2016 and 2019 by assuring them that all the tips they provided would go to Amazon ’s Flex drivers, employees who deliver packages with their own cars.
Schwalb's office alleged that by diverting millions of dollars in tips, Amazon was able to save on its own operating costs and therefore increase profits. 'When companies mislead customers to boost their profits by stealing tips intended for their workers, they are cheating their consumers, their employees, and their competitors who play by the rules,' Schwalb said. Amazon said in a statement to Fox News Digital that the company disagrees with the allegations, noting that Amazon Flex has evolved since then. 'For nearly a decade, Amazon Flex has empowered delivery partners to earn extra money on their own schedules,' Amazon spokesperson Steve Kelly said. 'Like any successful program, Amazon Flex has evolved over time, and this lawsuit relates to a practice we changed more than five years ago. While we continue to disagree with these allegations, we’re happy to have the matter behind us so we can continue to focus on supporting delivery partners and customers.'When Amazon Flex launched in 2015, consumers were able to tip their delivery drivers at checkout, which stated that 100% of the tips would go to the drivers. The lawsuit claimed that Amazon changed its driver payment model the following year, and that instead of allowing the tips to increase the driver’s total compensation, the company used it to cover the employees’ base wages Amazon had already promised to pay the drivers. According to the Federal Trade Commission, the payment model change was not disclosed to the drivers or the consumers, allowing the model to continue taking tips until 2019, when Amazon became 'aware of the FTC’s investigation in 2019.' The company was accused of stealing more than $1 million in tips to cover its labor expenses. As part of a settlement with the FTC in 2021, all the customer tips at issue were eventually paid to the drivers, according to an Amazon spokesperson at that time. Aside from the restitution-only settlement with the FTC, the attorney general’s office filed a lawsuit for injunctive relief and civil penalties, noting that additional penalties were warranted to disincentivize unlawful behavior. 'It’s not sufficient, after being caught, to simply give back the ill-gotten gains,' Schwalb said. 'Rather, there must be meaningful consequences to deter misconduct from happening in the first place. Especially when living expenses are harder and harder to afford, my office will continue to ensure that hardworking District residents receive every penny of their earnings and consumers have confidence that they are not being misled.' According to the settlement, Amazon has denied all the allegations and claims. 'Amazon maintains that it made truthful, complete, unambiguous, and accurate representations to customers regarding tips for drivers,' the settlement stated. According to the settlement terms, Amazon will pay $3.95 million, including $2.45 million in penalties and $1.5 million in costs. The company has also agreed to maintain transparent tipping practices. 'If Amazon uses tips for any purpose other than increasing driver compensation, the company must make clear disclosures about how tips are used on both its website and its app,' the settlement stated.
AMAZON DELIVERY DRIVERS TIPS LABOR COSTS LAWSUIT SETTLEMENT FTC WASHINGTON DC
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Barry Silbert's Digital Currency Group to Pay $38 Million Fine in SEC SettlementBarry Silbert's Digital Currency Group has been charged for misleading investors
Read more »
Apple to Pay $20 Million in Settlement Over Early Apple Watch Battery IssuesApple Watch owners who experienced battery swelling issues in their early-generation Apple Watches (Original, Series 1, Series 2, and Series 3) may be eligible for compensation. A class-action lawsuit alleged that these models were prone to battery swelling, potentially damaging other components. While Apple denies the claims, they have agreed to settle for $20 million to avoid further litigation.
Read more »
NWSL to Pay $5 Million in Settlement to Players Impacted by Abuse ScandalThe National Women's Soccer League (NWSL) has agreed to a $5 million settlement with players who suffered abuse. The settlement, announced by multiple Attorneys General, also requires the league to maintain safeguards implemented after investigations revealed widespread misconduct.
Read more »
National Women's Soccer League to Pay $5 Million in Abuse SettlementThe National Women's Soccer League (NWSL) has agreed to a $5 million restitution fund and implement reforms to address a systemic culture of sexual and racial abuse. The settlement, reached with attorneys general from New York, Illinois, and Washington, D.C., follows a multi-year investigation that found coaches abused their power over players. While the league denies guilt, it accepts the findings and pledges to prevent future abuse.
Read more »
NWSL ordered by New York AG James, others to pay $5 million settlement to abused payersThe National Women's Soccer League (NWSL) will pay $5 million to current and former players who experienced harassment and sexual misconduct.
Read more »
Progressive to Pay $3.25 Million in Data Breach SettlementProgressive agreed to a $3.25 million settlement over a lawsuit alleging the company exposed consumer data including names, Social Security numbers, driver's license info, financial account details, and credit card numbers. Consumers who can document losses can claim up to $5,000, while others may receive a smaller payout. The deadline to file a claim is February 18, 2025.
Read more »