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FTC says Amazon took $62 million in tips from drivers, will be paying them back

Amazon-Driver Tips
Posted at 4:23 PM, Feb 03, 2021
and last updated 2021-02-03 16:23:13-05

SEATTLE, Wash. — Amazon is paying nearly $62 million to settle charges that it took tips from its Flex delivery drivers.

Drivers in the Amazon Flex program are classified as independent contractors and agree to make deliveries using their personal vehicles. They deliver goods ordered through the Prime Now and Amazon Fresh programs, which allow customers to give the drivers a tip.

The Federal Trade Commission said Tuesday that for more than two years, Amazon didn’t pass on the tips to drivers, even though it promised shoppers and drivers it would do so.

The FTC says Amazon regularly advertised that drivers participating in its Flex program would be paid $18–25 per hour for their work and receive 100% of the tips they earned.

However, the FTC alleges Amazon lowered the hourly rate in 2016 without letting the drivers know and the company used the customer tips to make up the difference between the new lower hourly rate and the promised rate. The FTC says this resulted in drivers’ being shorted more than $61.7 million in tips.

“Rather than passing along 100% of customers’ tips to drivers, as it had promised to do, Amazon used the money itself,” said Daniel Kaufman, Acting Director of the FTC’s Bureau of Consumer Protection.

The FTC says Amazon didn’t stop taking the money until 2019, when the company found out about the commission's investigation.

The online shopping giant will pay $61.7 million to settle the charges, which the FTC says will go back to drivers.

“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,” said Kaufman.

In addition to paying the drivers back, the FTC says Amazon will be prohibited 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 also will be prohibited from making any changes to how a driver’s tips are used as compensation without first obtaining the driver’s express informed consent, according to the FTC.

Seattle-based Amazon.com Inc. did not immediately respond to The Associated Press’ request for comment Tuesday.