**FTC Penalizes Lyft for Misleading Earnings Claims to Drivers**

The Federal Trade Commission (FTC) has taken decisive action against rideshare company Lyft for allegedly misleading drivers with deceptive earnings and incentives claims. Following the FTC's investigation, Lyft has agreed to a proposed settlement that mandates the company to substantiate its earnings claims with concrete evidence, distinctly notify drivers about the terms of incentives, and pay a civil penalty of $2.1 million.

The lawsuit, initiated and filed by the U.S. Department of Justice upon the FTC's referral, alleges that as the demand for rideshare services surged in 2021 and 2022, Lyft engaged in false advertising regarding drivers' potential earnings. According to the complaint, Lyft advertised that drivers in cities such as Atlanta, Portland, and Los Angeles could earn up to $33, $41, and $43 per hour, respectively. However, these figures represented the earnings of the top one-fifth of drivers, significantly inflating the expectations for average drivers by as much as 30%.

Furthermore, the FTC's complaint points out that Lyft's hourly earnings claims included tips paid by passengers, which many drivers assumed would be in addition to their hourly pay. Complaints from drivers also highlighted dissatisfaction with Lyft's "earnings guarantees." Drivers were often misled to believe that bonuses were in addition to their earned pay, only to find that the guarantees merely compensated for the difference between their actual earnings and the guaranteed amount.

One driver reported to the FTC, describing the practice as “unacceptable and not fair." The driver expressed frustration, stating, "As the driver, I expected to be paid for the service I rendered." Despite receiving the FTC's Notice of Penalty Offenses informing Lyft of the unlawful nature of their deceptive earnings claims, the company continued these practices.

Under the proposed settlement, Lyft is prohibited from making any earnings claims without sufficient evidence and from including tips in hourly earnings claims. Lyft is also required to notify its drivers of the settlement and clearly disclose that earnings guarantees will only cover the difference between regular earnings and the guaranteed amount.

This action is part of the FTC's broader initiative to safeguard workers in the gig economy. Over recent years, the FTC has secured significant settlements to rectify deceptive practices, including a $60 million settlement with Amazon in 2021 and actions against HomeAdvisor, Arise, and Care.com in subsequent years, collectively providing millions in redress to affected workers.

The Commission voted 3-2 to authorize the staff to refer the complaint to the DOJ and approve the proposed consent decree, with dissenting votes from Commissioners Melissa Holyoak and Andrew Ferguson. Chair Lina M. Khan, along with Commissioners Rebecca Kelly Slaughter and Alvaro M. Bedoya, expressed support for the action, emphasizing the commitment to preventing exploitative practices in the gig economy.

The complaint and settlement proposal have been filed in the U.S. District Court for the Northern District of California, marking a significant step towards upholding fair labor practices in the rapidly growing gig economy.