Uber Pays Federal Trade Commission $20 Million for Overstating Drivers’ Income

Uber, the tech-based taxi company, has agreed to pay $20 million to settle a lawsuit with the Federal Trade Commission, who accused the company of greatly overstating driver income.

Uber lured potential drivers with fake promises, saying a ‘median driver' would make $90,000 annually, driving their own car. The US Federal Trade Commission, however, discovered that the company's projections were wildly optimistic, to the point of being fraudulent.

In fact, a median Uber driver grosses about $62,000 per year in New York City, and about $53,000 in San Francisco, according to the FTC website. While this sum would not leave you starving, it is a far cry from what is advertised, and the FTC has held Uber responsible for willful misinformation.

According to the consumer protection agency, drivers in 18 American major cities earned far less than the company promised. Drivers also reportedly pay a lot more to lease cars than the company claims, despite that the company promised to "provide the best financial options."

"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," said Jessica Rich, director of the FTC's Bureau of Consumer Protection.

In order to make its network as large as possible, Uber offered drivers flexible hours, instead of full-time jobs, but leaves all the expenses, such as fuel, car insurance and maintenance, to the drivers themselves. The company also set up a car-leasing program, promising future drivers options that will let them "own a car for as little as $20/day or lease a car with payments as low as $17 per day," regardless of a driver's credit history, according to FTC.

While the company agreed to pay the $20 million settlement fine, it neither denied nor acknowledged any wrongdoing.

"We're pleased to have reached an agreement with the FTC," an Uber spokesman said. "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."

Most of the settlement payment will go to the drivers as a form of compensation, according to FTC. The total number of drivers who will receive compensation, as well as the amount, remains undisclosed.

Interestingly, in addition to a settlement fine, Uber is now legally obliged to provide drivers and customers with factual information.

"In addition to imposing a $20 million judgment against Uber, the stipulated order prohibits the company from misrepresenting drivers' earnings and auto finance and lease terms," announced the FTC website.

"The order also bars Uber from making false, misleading, or unsubstantiated representations about drivers' income; programs offering or advertising vehicles or vehicle financing or leasing; and the terms and conditions of any vehicle financing or leasing."