Thousands of Uber drivers to get settlement checks
(CBS NEWS) -- Thousands of current and former Uber drivers will start receiving checks averaging $223 this week, thanks to a Federal Trade Commission settlement made last year with the ride-hailing concern. The FTC had sued Uber last year, claiming it mislead drivers with both false income estimates and misleading lease agreement terms.
Specifically, the FTC alleged that Uber had claimed that the annual median income for UberX drivers in New York was $90,000 and $74,000 in San Francisco. However, the agency said these claims were inflated by $20,000 to $30,000 annually. The median income in New York was actually $61,000 and $53,000 in San Francisco, according to the FTC. Less than 10 percent of UberX drivers were able to earn the amounts Uber claimed as its average.
Moreover, Uber's "vehicle solutions program," which helps drivers buy and lease cars, had claimed it could get consumers into purchase agreements for as little as $140 per week ($560 per month) and could arrange vehicle leases for as little as $119 per week ($476 per month). In reality, they paid $160 per week ($640 monthly) for leases and $200 per week ($800 monthly) to purchase cars through the program, according to the FTC.
Shortly after filing charges, the FTC struck a settlement in which Uber agreed to pay $20 million and stop making unsubstantiated claims about drivers' earnings or its auto financing and lease deals. These checks are the result of that settlement.
"We're pleased to have reached an agreement with the FTC," Uber said in a prepared statement. "We've made many improvements to the driver experience over the last several years and will continue to focus on ensuring that Uber is the best option for anyone looking to earn money on their own schedule."
Notably, the settlement amount is apparently unrelated to actual claims for damages. FTC Commissioner Maureen K. Ohlhausen objected to the settlement when it was struck for this reason, claiming that consumer's actual damages were likely to be less than the $20 million that the FTC received.
However, the FTC now says nearly 88,800 drivers qualify for checks. With that substantial pool of claimants, the average check adds to less than the estimated loss that the FTC claimed the average Uber driver would have suffered in just a month or two, if that driver had relied on the site's claims to buy or lease a car.
"We certainly hope refunds will be higher than that in New York City," said Ryan Price, executive director of the Independent Driver's Guild. "Drivers are stuck with massive debt from buying vehicles under these false promises. So $222 is not going to cut it."
Uber has a history of changing terms and conditions in ways that aren't advantageous to drivers, according to SideHusl.com. For instance, the company offers a premium ride service called UberBlack that requires higher-end cars and commands higher fares. However, when Uber was having difficulty filling ride orders through its lower-end UberX service, it told UberBlack drivers that they would have to take those fares.
UberBlack drivers revolted, and Uber eventually rescinded the requirement, but many drivers fled to competitors Lyft and Via in the interim.
In addition, both Uber and Lyft have changed the commissions they charge drivers. The sites initially demanded just 20 percent of each fare, but they now take as much as half, Price said. The Independent Driver's Guild is now pushing to pass a minimum wage law for ride-share drivers in New York.
Checks will be mailed this week, the FTC said. Each one will vary, based on how much the driver earned, the city and state in which he or she drove, and the total amount available in the settlement pool, according to the FTC.
Generally speaking, the checks will go to drivers who drove for Uber during 2014 and 2015 in major cities and counties, where Uber was heavily recruiting drivers with allegedly misleading claims. Those include Atlanta, Baltimore, Boston, Chicago, Dallas, Denver, Houston, Los Angeles and Orange Counties, Miami, Minneapolis, New Jersey, New York, Philadelphia, Phoenix, San Diego, San Francisco, Seattle and Washington, D.C.
Consumers who receive checks are advised to cash them within 60 days of receipt or they'll become void. The FTC noted that this is a regulatory action and would in no way affect any private cause of action that drivers may have pursued separately against Uber.