Why it matters: The Federal Trade Commission has taken action against Lyft for deliberately misleading drivers about potential earnings. This action exposes a pattern of deceptive practices that targeted vulnerable workers in the gig economy. This enforcement action highlights the ongoing exploitation of workers through misleading recruitment tactics.
The Deception: Lyft advertised inflated hourly earnings based on the top 20% of drivers’ income, creating unrealistic expectations for new recruits. The company promoted rates as high as $43 per hour in Los Angeles while actual median earnings were 30% lower, according to the FTC.
- Included tips in advertised hourly rates without disclosure (Techcrunch)
- Misrepresented earnings guarantees as bonuses (The Verge)
FTC Chair Lina M. Khan: “It is illegal to lure workers with misleading claims about how much they will earn on the job. The FTC will keep using all its tools to hold businesses accountable when they violate the law and exploit American workers.” (PCMag)
Worker Impact: Thousands of drivers, particularly those with limited English proficiency, fell victim to Lyft’s misleading claims. Many discovered their actual earnings were significantly lower than advertised, with some earning $5-10 less per hour than promised.
- Median earnings fell far below advertised rates
- Drivers misled about promotional guarantees
Regulatory Response: The FTC’s action requires Lyft to fundamentally change its advertising practices and provide clear, accurate earnings information to drivers. The $2.1 million penalty demonstrates regulators’ commitment to protecting gig workers from exploitative practices.
- Must base claims on typical earnings
- Required to provide evidence for compensation claims
