Uber will pay $20 million for exaggerating drivers' earnings

Less than 10 percent of drivers in New York and San Francisco make Uber's advertised salaries.

Reuters/Robert Galbraith

In yet another big settlement for the ride-hailing giant, Uber has agreed to pay a $20 million fee to resolve a case with the US Federal Trade Commission. According to the FTC's complaint, Uber intentionally exaggerated drivers' potential income and vehicle financing rates in order to attract new drivers to its platform.

The FTC claimed that Uber was advertising an annual median income of over $90,000 per year for uberX drivers in New York and more than $74,000 for uberX drivers in San Francisco. But, as the commission found out, less than 10 percent of all drivers in those cities actually make that much. The complaint also alleges that Uber was inflating the hourly earnings on job boards like Craigslist.

New drivers who financed a new car through Uber's Vehicle Solutions Program found out the company's claims were too good to be true as well. Although Uber told new drivers they would be able to lease a new car for around $119 per week, the actual lease rates never dipped below $200 from late 2013 to April 2015. And, despite it's promise of delivering "the best financing options available," it turns out that Uber's rates were actually worse than consumers with similar credit scores could have gotten elsewhere. Adding insult to overpriced injury, Uber tacked on mileage limits to lease agreements that were advertised with unlimited mileage.

The terms of the settlement mean Uber is not actually admitting guilt here, but the FTC's director of Consumer Protection has stated the funds will be going back to the affected drivers. Moving forward, Uber will want to double-check that it can deliver on its promises -- as part of the judgment, Uber is banned from making "false, misleading, or unsubstantiated representations" about drivers' potential pay and financing or leasing options.

Last year, Uber was ordered to pay $384,000 to users for its misleading tip policy and the company's UberEats delivery business was likewise slapped with a lawsuit over missing tips. The company also paid $10 million to the District Attorneys of San Francisco and Los Angeles for making false statements about its background checks and another class action lawsuit from drivers in California and Massachusetts is still getting settled but will likely exceed $100 million.