More than 140,000 Amazon drivers will receive nearly $60 million in withheld tips after the company reached a settlement with the the Federal Trade Commission (FTC) on Tuesday.
The funds will serve as reimbursement for tips that Amazon allegedly illegally withheld from drivers over a two-and-a-half year period between 2016 and 2019, the FTC said in a statement.
The FTC brought a lawsuit against Amazon and its subsidiary, Amazon Logistics, in 2021, claiming that the e-commerce company had not fully paid tips to drivers in its Amazon Flex program.
Drivers in the Amazon Flex program use their own vehicle to deliver packages and groceries ordered through programs such as Prime Now and AmazonFresh, allowing customers to give the drivers a tip.
The lawsuit claimed that the company regularly advertised that drivers in the program could earn anything between $18–25 per hour for delivering goods to customers and that Amazon told drivers they would receive 100 percent of the tips they earned while delivering with Amazon Flex.
Amazon also told its customers that 100 percent of the tips would go to drivers, too, the FTC said.
However, the FTC in its lawsuit claimed that Amazon had instead been practicing a tip-stealing scheme and had kept drivers’ tips over a two-and-a-half year period, only stopping its behavior after it became aware of the FTC’s investigation in 2019.
The FTC’s lawsuit claims that in late 2016, Amazon instead began paying its Flex program drivers a lower hourly rate, without first consulting its drivers. It then used the customer tips to make up the the difference between the new lower hourly rate and the promised rate, resulting in more than $61.7 million in tips missing from drivers’ pockets, the FTC said.
Amazon reportedly received hundreds of complaints from drivers over the missing tips and uninformed pay change but returned the complaints with form e-mails “falsely claiming that Amazon was continuing to pay drivers 100 percent of tips,” the FTC said.
However, it continued practicing the tip-stealing scheme until August 2019 when the FTC notified it of its investigation into the company. It then began utilizing a pay model of rewarding drivers with an identified base amount plus 100 percent of tips and provided its drivers with a breakdown of both their pay and the tips.
The Epoch Times has contacted Amazon for comment.
Amazon reached the settlement with the FTC in February, agreeing to pay a total of $61,710,583, which represents the full amount that Amazon allegedly withheld from drivers.
The FTC said the settlement also “prohibits Amazon from misrepresenting any driver’s likely income or rate of pay, how much of their tips will be paid to them, as well as whether the amount paid by a customer is a tip.”
Amazon will now be unable to make any changes as to how their drivers’ tips are used as compensation without first consulting the driver and getting their full consent.
Daniel Kaufman, acting director of the FTC’s Bureau of Consumer Protection praised Tuesday’s settlement.
“Rather than passing along 100 percent of customers’ tips to drivers, as it had promised to do, Amazon used the money itself,” Kaufman said. “Our action today returns to drivers the tens of millions of dollars in tips that Amazon misappropriated, and requires Amazon to get drivers’ permission before changing its treatment of tips in the future.”
