In January, Uber posted an ad on Craigslist to attract new drivers by offering high hourly rates.
Drivers in Boston were told that they will be making $25 an hour but a lawsuit revealed only 10% of drivers actually made that amount.
In separate statements that Uber made to the media, which were also posted on its site, Uber said “the potential income a driver on UberX can make in a year is more than $90,000 in New York and more than $74,000 in San Francisco”.
However, the FTC found that the average amount for a driver working 40hrs a week was significantly less. In New York the median was $29,000 and in San Francisco it was $21,000.
The FTC claimed that Uber had put up highly deceptive offers in their ads in 18 cities across the US. In Chicago less than 20% earned $21, in Minneapolis – 10%, $18 and so on. Very few drivers were paid the actual amount that was advertised.
Uber chose not to further aggravate the situation; even though it is not admitting any wrong doings, it has agreed to pay the drivers a massive $20m to settle the claim. How this is going to be done is still not clear but the FTC has ordered Uber to find a way to compensate the drivers.
Since the claims of false advertising have arisen, the company claims that it has found a different method of advertising to new recruits but has not yet revealed it.
About the settlement, a spokeswoman to Uber said “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,” she continued.
Despite Uber claiming that it has been working to improve the drivers’ experiences, drivers complain that the improvements do not cover the cost of running and maintaining the car.
Apparently, ride-sharing companies like Uber have a tendency to mislead drivers.
“Companies like Uber shift cost, risk, and burden onto drivers and taxpayers when they fail to provide the basic benefits so many Americans take for granted, from health insurance to sick leave.
“On top of that, drivers are stuck with the bill for their vehicle, gas, repairs, maintenance, insurance, the list goes on,” says Jim Conigliaro from the Independent Drivers Guild.