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Amazon settled the charges and the deal was announced by the Federal Trade Commission on Tuesday, Feb. 2.
To comply with the settlement, Amazon will have to pay back $61.7 million to drivers, provide only accurate information about tips and pay to both customers and drivers, and get drivers’ consent before changing how it handles tips in the future, the FTC said.
The FTC said that mega online-retailer Amazon had kept drivers’ tips for years despite numerous job ads touting that Flex drivers would keep “100% of customer tips” in addition to base pay.
Over a two-and-a-half-year period, the FTC says Amazon used $61.7 million worth of drivers’ tips to subsidize drivers’ base pay.
“Customers thought they were tipping drivers - not Amazon - and drivers were left shortchanged,” the FTC said in a statement on Tuesday, Feb. 2.
Amazon was aware of the problem and received numerous complaints from drivers in the Flex program - a freelance gig in which drivers contracted with Amazon to use their own vehicles to make deliveries.
Despite this, Amazon continued to divert drivers’ tips until the FTC notified Amazon of its investigation, the FTC said.
In a statement to CNBC, an Amazon spokesperson said the company disagrees with the FTC’s assertion that its pay model was unclear.
“While we disagree that the historical way we reported pay to drivers was unclear, we added additional clarity in 2019 and are pleased to put this matter behind us,” Amazon told CNBC.
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