Attorney General Brian L. Schwalb announced five days ago that Amazon.com, Inc. and Amazon Logistics, Inc. have agreed to pay $3.95 million to settle a lawsuit filed by the Office of the Attorney General (OAG). The lawsuit accused Amazon of misleading District of Columbia consumers by falsely claiming that 100% of tips paid to Amazon Flex delivery drivers would go directly to the drivers. In reality, a significant portion of these tips was used to reduce Amazon’s own labor costs, ultimately boosting the company’s profits.
The settlement resolves a case originally filed by the OAG in 2022, which found that Amazon had assured consumers that tips would benefit delivery workers when, in fact, much of the money went to offset the company’s operating expenses. As part of a previous legal settlement, Amazon has already reimbursed drivers for the wages they were denied, but today’s settlement requires the company to pay additional financial penalties and change its business practices.
“When companies mislead customers to boost their profits by stealing tips intended for their workers, they are cheating their consumers, their employees, and their competitors who play by the rules,” said Attorney General Schwalb. “It’s not sufficient, after being caught, to simply give back the ill-gotten gains. There must be meaningful consequences to deter misconduct from happening in the first place. My office will continue to ensure that hardworking District residents receive every penny of their earnings and consumers have confidence that they are not being misled.”
Amazon’s Amazon Flex service, launched in 2015, promised fast delivery of Amazon products and encouraged customers to tip delivery drivers. The company assured consumers that 100% of tips would go directly to the drivers. However, in 2016, Amazon modified its driver payment model, diverting a portion of the tips to cover the company’s base wages for drivers, rather than increasing the drivers’ overall compensation. Despite this change, Amazon continued to advertise that all tips went directly to the drivers.
The OAG’s lawsuit alleged that Amazon violated D.C.’s consumer protection laws by deceiving customers into thinking their tips were directly benefiting delivery workers when, in fact, Amazon was using the tips to reduce its labor costs. The lawsuit claimed that millions of dollars in tips were paid under false pretenses.
As part of the settlement, Amazon has agreed to pay $3.95 million, including $2.45 million in civil penalties and $1.5 million to cover the costs of the OAG’s litigation. Additionally, Amazon is required to ensure greater transparency in its tipping practices. Going forward, if the company uses tips for any purpose other than increasing driver compensation, it must provide clear disclosures to consumers on both its website and app.
The settlement represents a significant step in holding companies accountable for misleading consumers and ensuring that workers are fairly compensated for their labor. The OAG emphasized the importance of maintaining trust with consumers and ensuring that businesses are transparent in their practices.
This case was handled by Assistant Attorneys General Norman Anderson, Sarah Levine, Jessica Micciolo, Jude Nwaokobia, and Morgan Sperry, as well as Workers’ Rights and Antifraud Section Assistant Chief Dennis Corkery and Section Chief Graham Lake. The investigation was supported by investigators Kenithia Alson and Shelby Miller, alongside interns Kaylah Paras and Adam Strathearn
Read Settlement Here
