Lyft will have to tell drivers how much they can truly earn, with evidence

Lyft has agreed to to tell its drivers how much they can truly earn on the ride-hailing platform — and back it up with evidence — as part of its settlement for a lawsuit filed by the US Justice Department and the Federal Trade Commission. The lawsuit accused the company of making “numerous false and misleading claims” in the advertisements it released in 2021 and 2022, when the demand for rides recovered following COVID-19 lockdowns in the previous years. Lyft promised drivers up to $43 an hour in some locations, the FTC said, without revealing that those numbers were based on the earnings of its top drivers.

The rates it published allegedly didn’t represent drivers’ average earnings and inflated actual earnings by up to 30 percent. Further, the FTC said that Lyft “failed to disclose” that information, as well as the fact that the amounts it published included passengers’ tips. The company also promised in its ads that drivers will get paid a set amount if they complete a certain number of rides within a specific timeframe. A driver is supposed to make $975, for instance, if they complete 45 rides over a weekend.

Lyft allegedly didn’t clarify that it will only pay the difference between the what the drivers’ earn and its promised guaranteed earnings. Drivers thought they were getting those guaranteed payments on top of their ride payments as a bonus for completing a specific number of rides. The FTC accused Lyft of continuing to make “deceptive earnings claims” even after it sent the company a notice of its concerns in October 2021, as well.

Earlier this month, the company launched an earnings dashboard that showed the estimated hourly rate for each ride, along with the driver’s daily, weekly and yearly earnings. But under the settlement, Lyft will have to explicitly tell drivers how much their potential take-home pay is based on typical, instead of inflated, earnings. It has to take tips out of the equation, and it has to to clarify that it will only pay the difference between what the drivers get from rides and its guaranteed earnings promise. Finally, it will have to pay a $2.1 million civil penalty.