Tech giant Amazon will pay the sum of $61.7 million in settlement to the Federal Trade Commission (FTC) for tips it owed its Flex drivers.
According to the FTC, the settlement fee was the “full amount that Amazon allegedly withheld from drivers” over the course of two and a half years.
The commission added that Amazon only started paying the tips when “only after becoming aware of the FTC’s investigation in 2019.”
Amazon claims that the withheld tips were used to cover the difference after lowering its hourly rate but the change wasn’t communicated to the drivers.
The Amazon Flex service was launched in 2015 and it gives anyone access to sign up and deliver orders to customers.
Payment was made based on an hourly rate for each delivery and every delivery attracts a tip from customers.
The tips rate, according to Amazon, was billed at $18-$25. It also promised drivers that they would “receive 100%” of their tips.
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According to the Acting Director of the FTC’s Bureau of Consumer Protection, Daniel Kaufman, “Rather than passing along 100 percent of customers’ tips to drivers, as it had promised to do, Amazon used the money itself.
“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.”
Besides the settlement fine, the FTC also restricts the tech firm from making any other changes to the way drivers are tipped without an “express informed consent.”
In 2020, Amazon reported a total of $96.15 billion in revenue with earnings of $12.37 per share.
The company projected that in the fourth quarter it would pull in revenue of $112-$121 billion.
