Uber Lawsuit: Ride Hailing Service Settles With FTC Over Advertised Driver Income

A recent Uber lawsuit settlement was reached after the Federal Trade Commission accused the ride-hailing service of misleading drivers about their potential income. Uber had posted ads on Craigslist and other job hunting places claiming that drivers could earn good money simply giving customers a ride from Point A to Point B.

Part of the problem was that they listed hourly rates, and that's not how taxi services work. While original taxi services like Yellow Cab charge by the mile, Uber gives consumers a quote before the car even shows up, often lower than what taxi drivers normally charge to help them compete. The hourly rate often depends on a lack of traffic congestion, a common issue in major cities, and optimal weather. Driving on ice will slow you down if you're doing so safely, as sliding is a common result of going too fast, sometimes ending in easily avoidable collisions.

It was mostly in big cities that Uber drivers weren't given a fair estimate with heavy traffic in mind. You don't earn the same hourly rate during rush hour that you would when traffic moves more freely. Of course, a more accurate unit of measure would be commission, because you earn the same amount despite how long it takes.

This might make it tempting for drivers to simply drive faster and earn more, but that could be a violation of Uber's terms of service. Driving safely is part of the job, and failure to do so can get you fired.

Driving safely is part of an Uber driver's job.
Driving safely is part of an Uber driver's job. [Image by Pattayaphoto/Shutterstock]

This is also a major hurdle for Uber's attempt to convert to driverless cars, as proven when they tried testing them in San Francisco last year. On the very first day of the test, other motorists reported the cars ignoring red traffic lights, with at least one motorist nearly getting hit. The "assistant" drivers were suspended for those violations, and the SF Department of Motor Vehicles ordered the service to cease and desist with the test until they get a permit to use driverless cars in California. Uber insisted that the assistant was present and there was still a driver, but they eventually relented and stopped the test in order to obtain the proper permit.

With such a hurdle on driverless cars, it's clear that there is still a demand for paid drivers. According to the ads, though, Uber was claiming a potential of $16 and $29 per hour, says Techspot. Not only did very few drivers actually earn that much, but claiming a potential hourly rate was poor wording for a business that pays commission.

The Federal Trade Commission noticed this and filed the latest Uber lawsuit, claiming that the company was lying to its potential employees.

In San Francisco, for example, Uber claimed that drivers could earn as much as $29 per hour. In a city with such a high standard of living, that could appeal to people looking for a little extra money. However, less than a fifth of all drivers actually ended up earning that much. Miami was closest with Uber's estimate, with half of the drivers actually earning the quoted $16 per hour.

San Francisco is the site of many of Uber's problems.
San Francisco is the site of many of Uber's problems. [Image by Jorg Hackemann / Shutterstock]

That means Miami's Uber drivers were barely earning as much as the average McDonald's employee if certain protests pay off.

The cities hosting the biggest Uber pay deception were big ones in the Northeast and Northern Midwest, such as Philadelphia, Minneapolis, and Boston. Each of them only had a 10th of all drivers actually earning the quoted hourly rate, which in Minneapolis' case meant they often needed a second job at the least.

After settling with the FTC for $20 million, CNET says Uber released a statement.

"We're pleased to have reached an agreement with the FTC. We've made many improvements to the driver experience over the last year and will continue to focus on ensuring that Uber is the best option for anyone looking to earn money on their own schedule."

Will it be enough to persuade drivers who recently protested the low wages Uber actually offers in their cities?

[Featured Image by vectorfusionart/Shutterstock]