Uber to pay $20 million to FTC to settle claims that it exaggerated how much drivers would make

Uber will pay $20 million and alter various business practices in order to settle claims brought by the FTC that the ride-hailing company mislead drivers on how much they would make driving for Uber.

The FTC said Uber had “inflated” its hourly drivers’ earnings in online advertisements to attract drivers to its platform. “However, once Drivers have begun to receive their paychecks, Drivers have discovered their actual earnings were substantially less than Uber claimed,” the FTC complaint says.

For example, Uber advertised on Craigslist that drivers in Minneapolis could make $18 per hour and Boston drivers could make as much as $25 an hour. In both cases, fewer than 10% of Uber drivers in that city ever made the advertised hourly rate.

Uber FTC complaintFTC complaintThe FTC complaint shows advertised Uber fares versus how much drivers actually made.

The FTC also claimed that Uber’s vehicle solutions program, which helped drivers find vehicles to lease or own, advertised the “best financing options available.” Yet, drivers who leased through the platform received worse rates than customers with the same credit score would typically obtain.

The FTC started investigating Uber in 2015 and announced its settlement on Thursday. In addition to paying $20 million, the company is barred from misrepresenting drivers’ earnings and financing and lease terms for its vehicle leasing terms.

“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. “This settlement will put millions of dollars back in Uber drivers’ pockets.”

While Uber is still advertising earnings in advertisements, the company has a team of economists making sure the numbers best reflect average driver earnings.

“We’re pleased to have reached an agreement with the FTC,” 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.”

NOW WATCH: Watch this Uber driver go through 236 consecutive green lights in NYC without stopping

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.