WASHINGTON (Reuters) - Ride-hailing company Uber Technologies Inc has agreed to pay $20 million to settle claims by the U.S. government that it exaggerated prospective earnings in seeking to recruit drivers and downplayed the costs of buying or leasing a car, documents filed with a federal court on Thursday showed.

A photo illustration shows the Uber app logo displayed on a mobile telephone, as it is held up for a posed photograph in central London, Britain October 28, 2016. REUTERS/Toby Melville/Illustration

The company said on its website that some Uber drivers made more than $90,000 in New York and $74,000 in San Francisco when the real earnings were $61,000 and $53,000, respectively, the Federal Trade Commission said in a statement. It said Uber’s Vehicle Solutions Program gave inaccurate prices for leasing or owning a vehicle.

“This settlement will put millions of dollars back in Uber drivers’ pockets,” said Jessica Rich, director of the agency’s Bureau of Consumer Protection.

Under Uber’s business model, consumers use an app to hail a ride and pay Uber for it. The ride is provided by an independent contractor, who is paid by Uber.

“When Uber’s promised earnings have not materialized, and drivers have attempted to cancel their auto agreements, they have incurred significant monetary harm,” the Federal Trade Commission said in its complaint. “Uber’s practices have caused its drivers to suffer millions of dollars of injury.”

Uber, which operates in 74 countries, said in a statement it was “pleased” to have reached an agreement with the Federal Trade Commission.

“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,” Uber said.

Company spokesman Matt Kallman said Uber has more than 600,000 drivers in the United States.

In addition to the $20 million payment, Uber would be barred under the agreement from misrepresenting its drivers’ earnings or payments for automobiles.

Chairwoman Edith Ramirez and Commissioner Terrell McSweeny, both Democrats, voted for the settlement while Republican Commissioner Maureen Ohlhausen dissented. Ramirez has announced that she will step down Feb. 10.</s>WASHINGTON: The ride-hailing company Uber Technologies Inc has agreed to pay US$20 million to settle allegations that it exaggerated prospective earnings in seeking to recruit drivers, according to documents filed with a U.S. federal court on Thursday.

The company had on its website that UberX drivers made more than US$90,000 in New York and US$74,000 in San Francisco when the real earnings were considerably less, the Federal Trade Commission said in a court filing.</s>Ride-hailing company Uber Technologies Inc has agreed to pay US$20 million to settle claims by the US government that it exaggerated prospective earnings in seeking to recruit drivers and downplayed the costs of buying or leasing a car, documents filed with a federal court on Thursday showed.

[WASHINGTON] Ride-hailing company Uber Technologies Inc has agreed to pay US$20 million to settle claims by the US government that it exaggerated prospective earnings in seeking to recruit drivers and downplayed the costs of buying or leasing a car, documents filed with a federal court on Thursday showed.

The company said on its website that some Uber drivers made more than US$90,000 in New York and US$74,000 in San Francisco when the real earnings were US$61,000 and US$53,000, respectively, the Federal Trade Commission said in a statement. It said Uber's Vehicle Solutions Program gave inaccurate prices for leasing or owning a vehicle.

"This settlement will put millions of dollars back in Uber drivers' pockets," said Jessica Rich, director of the agency's Bureau of Consumer Protection.

Under Uber's business model, consumers use an app to hail a ride and pay Uber for it. The ride is provided by an independent contractor, who is paid by Uber.

"When Uber's promised earnings have not materialised, and drivers have attempted to cancel their auto agreements, they have incurred significant monetary harm," the Federal Trade Commission said in its complaint. "Uber's practices have caused its drivers to suffer millions of dollars of injury."

Uber, which operates in 74 countries, said in a statement it was "pleased" to have reached an agreement with the Federal Trade Commission. "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," Uber said.

Company spokesman Matt Kallman said Uber has more than 600,000 drivers in the United States.

In addition to the US$20 million payment, Uber would be barred under the agreement from misrepresenting its drivers' earnings or payments for automobiles.

Chairwoman Edith Ramirez and Commissioner Terrell McSweeny, both Democrats, voted for the settlement while Republican Commissioner Maureen Ohlhausen dissented. Ms Ramirez has announced that she will step down Feb 10.</s>WASHINGTON—Uber Technologies Inc. agreed Thursday to pay $20 million to resolve Federal Trade Commission allegations that it misled drivers about potential earnings and vehicle financing.

The consumer protection agency alleged that Uber exaggerated the...</s>Uber has agreed to pay $20m (£16m) to settle allegations it duped people into driving for its ride-hailing app with false promises regarding how much they'd earn.

According to a lawsuit brought by the US Federal Trade Commission (FTC), the company made exaggerated claims about how much drivers could earn and how affordable its vehicle financing plans were.

Messaging on Uber's site said that uberX drivers brought in a median income of over $90,000 (£73,000) a year in New York and over $74,000 in San Francisco. According to the agency's findings, fewer than 10 per cent of drivers in the city managed to bring in money on that level.

The agency said the annual median income was $61,000 in New York and $53,000 in San Francisco.

The FTC also alleged that drivers ended up paying considerably more to lease cars than Uber had claimed.

Read more: How Uber-style ride-sharing could dramatically reduce city traffic

The agreement with the FTC covers statements the firm made from late 2013 to 2015 as it sought to boost recruitment to drive expansion.

“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,” said Jessica Rich, director of the FTC’s bureau of consumer protection. “This settlement will put millions of dollars back in Uber drivers’ pockets.”

Uber said in a statement: "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."

Read more: Uber takes its self-driving cars to the streets of Arizona

The company says its appeal to many drivers is the flexibility and freedom of being able to drive "when and where they want" and make money when works for them.

The debate over whether its drivers are self-employed or workers also rages on. A landmark employment tribunal hearing found Uber drivers were entitled to basic workers' rights such as holiday pay last October, though Uber is appealing the decision.</s>SAN FRANCISCO — Uber will pay $20 million to settle federal charges that the ride-hailing company promised higher earnings than it could deliver in an effort to lure as many drivers as possible to the platform, the Federal Trade Commission said Thursday.

San Francisco-based Uber advertised that drivers made a median income of more than $74,000 a year in San Francisco, but drivers’ actual median income was $53,000, according to the federal agency. The commission claims less than 10 percent of drivers in San Francisco and New York made the high earnings Uber touted.

The federal complaint also accuses Uber of misleading drivers through its Vehicle Solutions Program, which lets drivers buy or lease cars for use on the Uber platform. On average drivers received worse rates on those deals than other customers with similar credit scores, according to the complaint.

“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,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection wrote in a news release. “This settlement will put millions of dollars back in Uber drivers’ pockets.”

Uber responded to the allegations in an emailed statement.

“We’re pleased to have reached an agreement with the FTC,” a spokeswoman wrote. “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.”</s>Uber to pay $20 mn to settle charge it misled drivers

Uber has agreed to pay $20 million to settle charges that the ride-sharing company exaggerated claims about driver pay and new car financing, US regulators said.

The money paid by San Francisco-based Uber Technologies will be used to provide refunds to affected drivers in the United States, according to the Federal Trade Commission.

"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," FTC bureau of consumer protection director Jessica Rich said in a release.

An FTC complaint accused Uber of exaggerating income potential in certain cities to attract new drivers, and making the terms of its vehicle-financing program appear more attractive than they were.

Uber had claimed that uberX drivers' median annual incomes topped $90,000 in New York and $74,000 in San Francisco, when the actual amounts came to $61,000 and $53,000 respectively, the FTC said.

The complaint also contended that while Uber claimed that its Vehicle Solutions Program provided the best financing options available, drivers received worse deals on average when it came to interest rates and leasing terms.

While negotiating the settlement, Uber held firm that its approach to calculating incomes differed from the FTC's, saying the company had no intention of deceiving prospective drivers.

Uber has recently stopped using an outside partner for financing vehicles in favor of an in-house program to better oversee the process.

"We're pleased to have reached an agreement with the FTC," an Uber spokeswoman said in an email response to an AFP inquiry.

"We've made many improvements to the driver experience over the last year."

Along with having to pay $20 million, Uber is barred from misrepresenting driver pay or terms for the financing of leasing vehicles, according to the FTC.

"The reality of being a ride-sharing driver is a far cry from the rosy picture these apps describe," said Jim Conigliaro, founder of the Independent Drivers Guild, which says it represents 45,000 Uber drivers in New York City.

"It is encouraging to see the FTC take them to task and refund drivers."</s>Uber Technologies is paying $20 million to settle allegations that it duped people into driving for its ride-hailing service with false promises about how much they would earn and how much they would have to pay to finance a car.

The agreement announced Thursday with the Federal Trade Commission covers statements Uber made from late 2013 until 2015 while trying to recruit more drivers to expand its service and remain ahead of its main rival, Lyft.

The FTC alleged that most Uber drivers were earning far less in 18 major U.S. cities than Uber published online. Regulators also asserted that drivers wound up paying substantially more to lease cars than the company had claimed.

“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,” said Jessica Rich, director of the FTC's Bureau of Consumer Protection.

In a statement, Uber said it was pleased to resolve 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,” the San Francisco company said.

Most of the proceeds from Uber's settlement will be paid out to drivers. Documents filed in San Francisco federal court didn't spell out how many people will get a cut of the settlement or what the average payment will be.

To ensure that cars are widely available, Uber has persuaded hundreds of thousands of people in the U.S. to become drivers by dangling the lure of making money at any time that's convenient for them. The drivers are considered independent contractors, which is another contentious issue because the classification excludes them from many of the benefits and protections given to full-time employees.

As part of its recruitment efforts, Uber has floated enticing estimates about how much drivers can make picking up passengers in densely populated cities.

The FTC's case took issue with how Uber presented its earnings estimates.

For instance, in a statement published on Uber's website from May 2015 through August 2015, Chief Executive Travis Kalanick boasted that the mid-range annual incomes of the service's New York city drivers exceeded $90,000 and the mid-range annual earnings of its San Francisco drivers topped $74,000, according to the FTC. The agency's investigation determined that the actual mid-range income for the New York drivers was nearly one-third less, at $61,000, and 28% less in San Francisco, at $53,000, during the year leading up to Kalanick's statement.

In August 2015, Uber revised its statement to specify its estimates reflected drivers' “potential” incomes in those two cities. The FTC says less than 10% of Uber drivers in New York and San Francisco hit the income levels circulated by the company.

Uber also exaggerated the average hourly earnings of its drivers in 16 other U.S. cities and Orange County in California, according to the FTC's complaint.

Regulators also blamed Uber for referring drivers to car financing programs that charged more than the company had promised.

The FTC approved the settlement in a 2-1 vote. The dissenting voter, FTC Commissioner Maureen Ohlhausen, objected because she didn't believe Uber's actions harmed consumers.</s>Popular ride-hailing service Uber has agreed to pay $20 million to close the book on federal charges that it used misleading and exaggerated earnings figures to attract new drivers to work with the company.

In a civil complaint [PDF], the Federal Trade Commission accused Uber of violating the law by using inflated income figures when marketing to potential drivers.

The FTC points to previous statements by Uber’s CEO that drivers for UberX — the standard level of car service for many Uber users — earned a median income of “more than $90,000/year/driver in New York and more than $74,000/year/driver in San Francisco.” This statement was later revised to say that these figures were “potential” earnings drivers could make in their respective cities.

However, the complaint contends that the real earnings figures, when calculated using a 40-hour work week, were significantly lower. According to the FTC, in 2014 — the year that the above statement was first made — a New York City Uber driver earned a median income closer to $60,000, while in San Francisco the actual median was around $53,000. Fewer than 10% of drivers in these two markets earned the potential income that the company had boasted about.

Beyond these statements from the CEO, the FTC also took issue with Craigslist ads posted by Uber in various markets around the country, advertising that Uber drivers could earn anywhere from $16 to $29 per hour, depending on the city.

Yet the FTC claims that actual earnings data from these cities shows that very few Uber drivers average the amounts touted in the ads. According to the following table, in some markets — like Boston, Philadelphia, and Minneapolis — fewer than 10% of drivers earned the advertised hourly average:

The FTC also saw problems with how Uber marketed its Vehicle Solutions Program, which allows people without cars of their own to finance a vehicle purchase while then using that car to drive for Uber.

After this program launched, Uber advertised it to potential drivers as a way to “own a car for as little as $20/day” or that drivers could lease a car with “payments as low as $17 per day.”

Problem is, according to the FTC, Uber had no actual information to base any of these statements on, and the reality of the lease terms has not been in line with what was advertised.

“Despite the claims that Drivers can make low weekly payments, the median weekly payment for Uber Drivers who entered into a lease from late 2013 through at least April 2015 has been over $200, while the median weekly payment for Uber Drivers who opted to purchase their vehicles through Uber’s Vehicle Solutions Program during the same time period has been over $160,” notes the complaint. “Further, information Uber had at the time it made the claims indicate that the claims are false. Uber’s communications with at least one auto company have acknowledged payment terms and conditions that are inconsistent with Uber’s promises to Drivers.”

The FTC also claims that many drivers who entered into the Vehicle Solutions Program thinking they would get a good deal actually ended up with interest rates that were likely higher than they would have received elsewhere.

“Uber’s marketing material to dealers has acknowledged that the lease-to-own option was a ‘one size fits all’ product with an ‘implied APR of 19.5%,’ significantly higher than even the industry average interest rates for consumers with deep subprime credit scores,” notes the FTC. “Additionally, the average rate of the other auto deals for Uber Drivers has been higher than the industry average for consumers with similar credit scores. Numerous Drivers who have purchased cars through Uber’s Vehicle Solutions Program have received interest rates on their retail installment contracts that are more than double the industry average rate for consumers with similar credit scores.”

Additionally, the FTC says that Uber misled drivers in this program into thinking they would not be bound my the typical mileage restrictions you see on many auto leases, by touting “unlimited miles.” In reality, according to the complaint, the leases obtained through the program came with annual mileage limits of between 37,500 and 40,000 miles.

These various allegedly misleading claims are in violation of the FTC Act, which prohibits deceptive business practices.

In addition to the $20 million judgment [PDF] against Uber, the company has agreed to refrain from misrepresenting the facts about drivers’ earnings, and the terms of its auto financing and leasing programs.

“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,” says Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “This settlement will put millions of dollars back in Uber drivers’ pockets.”

When reached for comment, Uber provided the following statement to Consumerist via email:

 “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.”

Today’s settlement was not unanimously supported by all three sitting FTC commissioners.

Commissioner Maureen Ohlhausen dissented from the decision, voicing concerns about how the Commission came to the $20 million settlement figure, noting that it appears to unrelated to any actual harm that may have been done to consumers as a result of these alleged FTC Act violations.

Ohlhausen contends that the overstated earnings boasts likely only caused “consumer injury that is a small fraction of today’s settlement,” and that the $20 million settlement amount “far exceeds the best estimate of actual consumer harm.”</s>Uber will pay $20 million to settle allegations from the Federal Trade Commission that the ride-hail giant advertised inflated estimates of how much its drivers earn on its website and in Craigslist job postings to entice them to join the platform.



Uber claimed that drivers in San Francisco earn more than $74,000 annually, and that those in New York make more than $90,000 a year, according to the FTC’s complaint, filed in a California court. Less than 10% of drivers earn that much money, and the median income is $29,000 less in New York, and $21,000 less in San Francisco, according to the complaint.

In 17 cities across the country, Uber advertised inflated hourly wages in job postings on Craigslist from at least January to March 2015, the FTC alleges, though the company’s own data showed that in several of those markets, fewer than 10% of its drivers had recently earned that rate.

“During and after the time period Uber has made these unsubstantiated earnings claims, in many markets, most Drivers have not made the claimed amount,” the complaint reads. “In many instances, Drivers have not made the promised amounts even when factoring in non-hourly earnings, such as payments for time-limited promotions and other incentives.”

Based on leaked documents and internal Uber calculations provided in response to the leak, BuzzFeed News reported in June that the net pay for drivers in some markets is comparable to that of a Walmart worker. BuzzFeed reported then that drivers in Denver take home an average of $13.17, those in Houston take home $10.75, and those Detroit take home $8.77.



The FTC also claimed that Uber promised to connect drivers with the “best financing options available” for a vehicle through third-party partner companies, but “Uber has not had any basis for making these claims.”

“Uber’s communications with at least one auto company have acknowledged payment terms and conditions that are inconsistent with Uber’s promises to Drivers,” the complaint reads.

As part of the settlement, Uber did not admit or deny the FTC’s allegations.

“We’re pleased to have reached an agreement with the FTC,” an Uber spokesperson said in a statement. “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.”
Uber agrees to pay $20 million to settle U.S. Federal Trade Commission claims the company exaggerated prospective earnings and downplayed the costs of buying/leasing a car when recruiting new drivers.