Amazon to pay $61.7mn to settle charges it stole driver tips

WASHINGTON: Amazon.com Inc agreed to pay more than $61.7 million to settle allegations it cheated Amazon Flex drivers out of nearly one-third of tips from customers for more than two years, the Federal Trade Commission said on Tuesday.

The money paid to the FTC will be used to compensate drivers, the agency said.

The FTC said Amazon in 2015 advertised that a program called Flex would pay drivers $18 to $25 an hour to make deliveries and that they would receive 100% of any tips.

Flex drivers are treated like independent contractors, and use their personal vehicles to make deliveries for Amazon.

But in late 2016 Amazon "secretly reduced its own contribution to drivers' pay," according to the FTC complaint.

"Amazon used the customer tips to make up the difference between the new lower hourly rate and the promised rate," the FTC said in a statement.

The FTC said Amazon dropped the controversial payment model in August 2019 after the agency opened an investigation and began detailing for drivers their base earnings and tips.

Amazon said it disagreed that the way it reported pay to drivers was unclear. "We added additional clarity in 2019 and are pleased to put this matter behind us," an Amazon spokeswoman said.

The FTC said Amazon also misled customers by telling them that drivers received 100% of any tip.

When drivers noticed that tips appeared to be missing, Amazon simply responded that it gave drivers "100% of customer tips," the FTC said in its complaint.

"In total, Amazon stole nearly one-third of drivers' tips to pad its own bottom line," Commissioner Rohit Chopra, a Democrat, said in a statement.

He urged the FTC to examine whether workers need to be protected from "other dominant middlemen."