On Thursday, Uber agreed to pay the US Federal Trade Commission (FTC) $US20 million ($26 million) over claims it misled prospective drivers, recruiting them with ads that inflated typical earnings and mischaracterised the terms of its vehicle financing program.
According to the FTC, Uber posted Craigslist ads in more than a dozen US cities that promised hourly rates far above what the average driver could expect to make. In Boston, for example, the company enticed potential contractors with an ad titled "Make $25/hour [$33/hour]" — a wage that the fewer than 10 per cent of drivers in the city actually achieved.
A chart from the FTC's complaint. Image: FTC
Similarly, Uber's CEO claimed on the company's website that the median income for drivers was "more than $90,000 [$AU119,389]" a year in New York and "more than $74,000 [$AU98,165]" a year in San Francisco. The FTC found that those numbers also applied to less than 10 per cent of drivers.
Finally, Uber offered to connect drivers with the "best financing options available" through its Vehicle Solutions Program. The commission said that that claim, too, was false.
"Uber failed to control or monitor the terms and conditions of the auto financing agreements through its program and in fact, its drivers received worse rates on average than consumers with similar credit scores typically would obtain," said the FTC in a press release. "In addition, Uber claimed its drivers could receive leases with unlimited mileage through its program when in fact, the leases came with mileage limits."
Under the terms of the settlement, the $US20 million ($26 million) will go towards repaying affected drivers and the company is prohibited from misrepresenting earnings or finance terms in the future. On Thursday, Uber neither admitted nor denied the commission's claims, simply stating, "We're pleased to have reached an agreement with the FTC."
"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," said a company spokesperson in a statement.