Rideshare service Uber has agreed to pay a $20 million settlement over federal charges that it misrepresented yearly and hourly incomes its potential drivers can make by joining the company, federal regulators said Thursday. In some cases, the stated median incomes were tens of thousands of dollars lower than the actual amount, the Federal Trade Commission said. File Photo by 360b/Shutterstock/UPI
Jan. 19 (UPI) -- Smartphone-based shuttle service Uber on Thursday agreed to pay $20 million to resolve federal charges that alleged the company misled potential drivers by overstating the incomes they can earn.
The U.S. Federal Trade Commission said Uber greatly exaggerated yearly and hourly driver earnings by tens of thousands of dollars. For example, regulators said, the company stated the yearly median income for an UberX driver in New York City was about $90,000 -- when the figure is actually closer to $60,000.
Similarly, claims of about $74,000 per year in San Francisco are really about $53,000, officials said.
"Less than 10 percent of all drivers in those cities earned the yearly income Uber touted," the FTC said in a news release. "Uber made high hourly earnings claims in job listings, including on Craigslist, but that the typical Uber driver failed to earn those advertised hourly amounts in various cities."
Also, the federal charges accused Uber of also misleading prospective drivers with its Vehicle Solutions Program, which offers drivers auto financing.
The settlement was filed in federal court in San Francisco.
"Many consumers sign up to drive for Uber, but they shouldn't be taken for a ride about their earnings potential or the cost of financing a car through Uber," Jessica Rich, Director of the FTC's Bureau of Consumer Protection, said in a statement announcing the settlement Thursday. "This settlement will put millions of dollars back in Uber drivers' pockets."
Claims about the company's auto assistance program underestimated amounts drivers would have to pay to finance or lease a vehicle, the charges said.
"We're pleased to have reached an agreement with the FTC," Uber said in a statement. "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."
On Uber's website, it tells potential recruits they can "make great money" by driving fares around town. The entire process is transacted through the firm's smartphone app.
The $20 million settlement will go toward refunds for affected drivers across the United States.
Thursday's agreement also prohibits Uber from engaging in similar deceptive promises about incomes and financing in the future.