Uber has agreed to pay $20million (£16.7million) to settle allegations that they misled drivers about potential earnings and the cost of financing a vehicle.
The agreement with the Federal Trade Commission (FTC) alleged that most Uber drivers were earning far less in 18 major US cities than Uber advertised in their recruitment efforts. It was also found that drivers paid substantially more to lease cars than advertised.
According to the FTC, in a statement published on Uber’s website from May 2015 through August 2015, CEO Travis Kalanick touted that potential mid-range annual incomes of the service’s New York city drivers exceeded $90,000 (£73,000) and the mid-range annual earnings of its San Francisco drivers received $74,000 (£60,000).
The investigation concluded that the mid-range income for New York drivers was a third less than stated and 28% less in San Francisco, during the year leading up to Kalanick’s statement – The Guardian reports. The case found that Uber exaggerated potential earnings in sixteen other US cities.
Jessica Rich, Director of the FTC’s bureau of consumer protection, said: “Many consumers sign up to drive for Uber, but they shouldn’t be taken for a ride about their earnings potential or the cost of financing a car through Uber.”
In a statement, Uber commented on the dispute: “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.”
It is unknown exactly how much, but most of the proceeds from Uber’s settlement will be paid out to drivers.
In August 2015, Uber revised its statement to have more accurate estimates to reflect drivers’ “potential” incomes in those two cities. The FTC reports that less than ten per cent of Uber drivers in New York and San Francisco reached the potential incomes advertised by the firm.
Regulators also blamed Uber for advocating car financing programs that cost more than the company originally stated.