The Department of Justice fined Lyft (ride sharing Uber-like app) for $2.1 million dollars.
According to the DOJ’s complaint, as early as 2021, Lyft used advertisements that highlighted specific hourly earnings to recruit drivers across the United States, suggesting that drivers could expect substantial pay for their work.
However, the federal government contends that these advertised figures reflected earnings only achievable by the top 20 percent of drivers, a critical detail that was not clearly disclosed. Most drivers would find these earnings difficult or impossible to attain under the average conditions.
The complaint further claims that Lyft used “earnings guarantees” to entice drivers to take on additional rides, offering a minimum income for completing a set number of rides within a given timeframe. Yet, as the government noted, these guarantees were not straightforward: drivers would only receive the difference between what they had already earned and the guaranteed amount if their earnings fell short, not the entire advertised guarantee in addition to their regular pay. This, too, was reportedly not clearly explained to drivers, potentially leading many to overestimate their compensation.
This issue of transparency in the gig economy is a growing focus for regulators as millions of workers rely on platforms like Lyft for income, often without the stability and predictability that comes with traditional employment. The misleading earnings claims not only shaped potential drivers’ initial decision to join Lyft but may have influenced current drivers to work more hours than they might otherwise choose. The FTC and DOJ’s action against Lyft highlights their commitment to challenging deceptive marketing practices that target vulnerable gig economy workers.
This settlement also imposes strict limitations on Lyft’s future advertising >:D
The court’s order enjoins Lyft from misrepresenting potential driver earnings, requiring the company to ensure that its marketing materials reflect realistic earnings projections that are accessible to the majority of its drivers. Lyft will also be subject to new monitoring and reporting requirements aimed at enforcing compliance with the order.
For Lyft, the settlement may represent an opportunity to restore some trust among drivers, who have often voiced frustration with the income instability inherent in gig work.
Lyft, like many gig economy companies, sets the rates for its drivers’ fares and retains a portion of each payment, which makes transparency around pay expectations all the more essential. Lyft, which did not admit any wrongdoing in the settlement, has stated it is committed to enhancing transparency in its driver recruitment efforts.