The Justice Department, in partnership with the Federal Trade Commission (FTC), has announced that Lyft Inc. has agreed to pay $2.1 million to resolve allegations that it made false and misleading statements about driver earnings. The settlement includes a permanent injunction barring Lyft from making deceptive claims about how much drivers can expect to earn on its platform.
Lyft, the popular ride-hailing service, operates a mobile app that connects drivers with passengers. The company recruits drivers through marketing campaigns and sets the rates for rides, collecting a portion of the fare. However, the government’s civil complaint, filed in the U.S. District Court for the Northern District of California, claims that since 2021, Lyft misled prospective drivers with advertising that inflated potential earnings.
“Lyft drivers deserve accurate information about how much they will be paid for the work they do,” said Director Samuel Levine of the FTC’s Bureau of Consumer Protection. “Our settlement with Lyft bans exaggerated earnings claims and underscores the FTC’s commitment to ensuring gig workers are treated fairly.”
The complaint specifically states that Lyft promoted high hourly earnings in its ads without revealing that these figures were based on the earnings of the top 20% of drivers, not an average or typical earning amount. Lyft also advertised “earnings guarantees,” promising drivers a set amount of pay if they completed a specific number of rides within a certain time frame. However, the guarantees were allegedly misleading, as drivers were only paid the difference between the guaranteed amount and their actual earnings, rather than receiving the full guaranteed amount on top of their regular earnings.
The government contends that Lyft continued these misleading practices even after receiving a “Notice of Penalty Offenses” in October 2021, which warned the company that such claims were unlawful.
Under the terms of the settlement, Lyft will pay the $2.1 million civil penalty and is now permanently prohibited from making false or misleading statements about driver earnings. The court order also includes provisions requiring Lyft to implement monitoring and reporting mechanisms to ensure future compliance.
