• The US Department of Justice filed a complaint against Lyft on Friday.
• The FTC said Lyft made “misleading” statements about how much hourly drivers could earn.
• Lyft agreed to a settlement proposal that included a civil penalty of $2.1 million.

Lyft has agreed to pay a $2.1 million civil penalty as part of a proposed settlement following a federal lawsuit, according to the Federal Trade Commission.

The U.S. Department of Justice filed a lawsuit against Lyft on Friday, claiming the ride-hailing company violated the Federal Trade Commission Act between April 2021 and June 2022.

The department said Lyft made “misleading income claims” about how much drivers could earn per hour — and special incentives — in some advertisements.

“Lyft used the 80th percentile hourly wage calculation for a given region. As a result, even relying on Lyft’s own calculations, only the top 20% of drivers, or just one in five drivers, have earned the hourly wage figures stated in the advertisements,” the complaint states. “For example, in August 2021, Lyft claimed that New Jersey drivers could earn up to $34 per hour, while Lyft’s own calculations put the median wage at just $25 per hour.

The Justice Department’s complaint stated that “because Lyft presented the earnings claim as an hourly amount and did not disclose that tips were factored into the figure, many drivers were likely to believing that the tips they earned would be added to the hourly earnings announced by the Department of Justice. business.”

Lyft also shared ads with “profit guarantees”
who “misled” drivers into believing they would receive the guaranteed bonus amount in addition to their ordinary earnings, according to the complaint.

The complaint says the FTC sent a letter to Lyft in 2021 warning the company that it could face civil penalties.

“Lyft continued to make misleading income statements in its advertisements even after receiving the notice,” the complaint states.

The company agreed to a settlement proposal the same day, saying it neither admitted nor denied any of the U.S. government’s claims.

When asked for comment, a Lyft representative directed Business Insider to a statement posted on the company’s website.

“After productive discussions, we agreed to pay the FTC US$2.1 million to resolve its concerns. We agreed to this settlement because we recognize the importance of transparency in maintaining trust in the communities we let us serve,” the statement said.

The statement referenced transparency initiatives launched by Lyft, including the “upfront payment” introduced in October 2022 and the distribution of a new earnings summary in February “so drivers can see a breakdown of where every penny of the passenger fare”.

The settlement requires Lyft to pay a civil penalty of $2.1 million.

“In addition to requiring the company to pay a civil penalty of $2.1 million, the proposed settlement will also prohibit Lyft from making claims on its profits unless it has significant evidence to support that claim,” a statement said. the FTC said in a press release. “Additionally, Lyft will be prohibited from making claims regarding hourly earnings including tips within the stated hourly amount.”

The settlement states that Lyft must also disclose to drivers that – as part of its income guarantees – they will only receive the difference between their regular income and the guaranteed amount.

Lyft must also notify drivers of the regulations.