The Federal Trade Commission (FTC) has announced Amazon is settling to the tune of $61.7 million for tips it withheld from drivers.
As part fo the Amazon Flex program, drivers were promised $18–25 per hour for making deliveries. In addition, ads recruiting Flex drivers routinely said: “You will receive 100% of the tips you earn while delivering with Amazon Flex.”
Amazon also assured customers that any tips they gave would go straight to drivers. There’s only one problem: Amazon didn’t pay its drivers the tips from customers, pocketing nearly $62 million.
“Rather than passing along 100 percent of customers’ tips to drivers, as it had promised to do, Amazon used the money itself,” said Daniel Kaufman, Acting Director of the FTC’s Bureau of Consumer Protection. “Our action today returns to drivers the tens of millions of dollars in tips that Amazon misappropriated, and requires Amazon to get drivers’ permission before changing its treatment of tips in the future.”
“This theft did not go unnoticed by Amazon’s drivers, many of whom expressed anger and confusion to the company,” said FTC Commissioner Rohit Chopra. “But, rather than coming clean, Amazon took elaborate steps to mislead its drivers and conceal its theft, sending them canned responses that repeated the company’s lies. The complaint charges that Amazon executives chose not to alter the practice, instead viewing drivers’ complaints as a ‘PR risk,’ which they sought to contain through deception.”
To make matters worse, in 2016, Amazon lowered the hourly rate they were paying drivers without notifying them. Instead, Amazon used the tips it had been withholding as a fund to maintain the $18-25 per hour rate, making drivers think they were receiving the same hourly rate.
In essence, Amazon was ‘robbing Peter to pay Paul,’ stealing from drivers tips to cover for the fact that it had lowered drivers hourly rates without telling them. Amazon only stopped this behavior after it became aware of the FTC’s investigation in 2019.
The $61.7 million settlement will be used by the FTC to compensate those drivers who were impacted. Amazon is also “prohibited from making any changes to how a driver’s tips are used as compensation without first obtaining the driver’s express informed consent.”
For a company already accused of illegally firing workers for trying to organize unions, and using Pinkerton detectives to monitor workers and thwart unionization efforts, it’s little wonder that Amazon employees continue working to unionize.
Amazon’s behavior in this matter is reprehensible, and represents a new low for corporate/worker relations.