Amazon kept $62 million in tips intended for drivers, FTC says

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Amazon needs to pay dorsum nearly $62 1 thousand thousand inwards drivers’ tips that it skimmed over the years, federal regulators said Tuesday. The Federal Trade Commission unveiled a charge against the ecommerce giant on Tuesday alleging that Amazon’s Flex programme stole nearly $62 1 thousand thousand inwards tips from its regular army of drivers betwixt 2016 as well as 2019.

“Rather than passing along 100 percentage of customers’ tips to drivers, equally it had promised to do, Amazon used the coin itself,” Daniel Kaufman, acting manager of the FTC’s Bureau of Consumer Protection, said inwards a statement.

amazon intended for drivers

News of the village comes equally Amazon founder Jeff Bezos said he was stepping downwardly equally CEO, capping off a twelvemonth of meteoric increment for the ecommerce company.

Launched inwards 2015, Amazon Flex allowed ordinary people to sign upwards for shifts using their personal machine to deliver Amazon packages. Amazon advertised that drivers could brand $18 to $25 an 60 minutes inwards the programme as well as earn tips for sure deliveries, according to the FTC complaint. The fellowship told drivers that it would “pass to y’all 100% of tips y’all earn”; it equally well told customers that “100% of your tips are passed on to your courier,” according to the FTC complaint.

Soon afterwards Amazon Flex launched, however, the fellowship started skimming drivers’ tips, the FTC claims. In belatedly 2016, the fellowship secretly switched to a variable-pay system, where the amount drivers earned would fluctuate based on an internal algorithm, regulators allege. Under this system, the charge alleges, Amazon could advertise a payment of “$18-$24” for a item delivery, but if a client tipped $6, Amazon would solely pay the driver $12, for an $18 total payment.

At that point, “Amazon decided to obscure from drivers that it was reducing their pay, as well as began reporting their profits equally a unmarried lump center that hid whatever distinction betwixt client tips as well as pay from Amazon,” the charge alleges. “Based on the information Amazon provided, drivers could non say whether Amazon had contributed its minimum for the delivery block or a lesser amount, nor could drivers say the amount of whatever client tip.”

Amazon equally well discouraged customers from tipping inwards cash, alongside the app maxim that “cash is non accepted upon delivery.”

“Huge PR risk”

Hundreds of drivers saw their pay decrease as well as complained to Amazon, the FTC said, but the fellowship responded to them alongside canned emails maxim that “delivery partners soundless earn $18-25 per 60 minutes including 100% of client tips,” the charge says. At the same time, Amazon employees circulated these complaints internally as well as acknowledged that the effect was “a huge PR adventure for Amazon,” the charge alleges.

Only when the FTC told Amazon it was beingness investigated did the fellowship alter its pay practices, announcing to drivers inwards August 2019 that it was implementing an “Updated Earnings Experience,” which was inwards fact the payment scheme Flex used upon its initial launch.

Amazon did non acknowledge wrongdoing equally purpose of the settlement. The fellowship volition locomote required to pay $61.7 1 thousand thousand to the FTC, which the way volition distribute to drivers. The understanding equally well formally bars the fellowship from lying nearly tips inwards the futurity as well as requires it to acquire drivers’ consent earlier changing payment models.

“While nosotros disagree that the historical way nosotros reported pay to drivers was unclear, nosotros added additional clarity inwards 2019 as well as are pleased to place this affair behind us,” an Amazon spokesperson told CBS News inwards a statement. “Amazon Flex delivery partners play an of import purpose inwards serving customers every day, which is why they earn amongst the best inwards the manufacture at over $25 per 60 minutes on average.

FTC commissioner Rohit Chopra urged the way to impose farther penalties as well as investigate if Amazon broke anti-monopoly laws, noting that the alleged scheme “likely produced pregnant benefits for the company.”

“[T]his cannot locomote the solely activeness nosotros bring to protect workers as well as families from dominant middlemen. The FTC volition equally well withdraw to carefully examine whether tech platforms are engaging inwards anticompetitive comport that hoodwinks workers as well as crushes law-abiding competitors,” Chopra said inwards a statement. “While is 1 of the largest, most powerful, as well as most feared firms inwards the world, the fellowship cannot locomote higher upwards the law.”

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