The US Federal Trade Commission on Friday announced the approval of a consent order against Amazon that requires the company to pay $61.7m to resolve allegations that for two and a half years it has made suggestions for Amazon Flex drivers. took and hid the diversion of money.
the deal was proposed in February But a sign-off from the US trade watchdog is required. This stems from FTC charges that Amazon misrepresented both Amazon Flex drivers and the public about what the company would pay for delivery work.
The tech giant launched its Flex service in 2015, promising drivers – whom it classified as independent contractors and referred to as “delivery partners” – that it would pay for the delivery of goods from Amazon.com, Prime Now Will pay $18-25 per hour. Home Goods), Amazon Fresh (groceries), and Amazon Restaurants (takeout).
Amazon’s ads made promises like, “You’ll receive 100 percent of the tips you earn when you deliver with Amazon Flex.”
However, during the period from late 2016 to August 2019, drivers – who, as independent contractors, paid for their cars, fuel, maintenance and insurance – saw only a portion of the promised gratuity when customers tipped opted to give.
That’s because Amazon reportedly, without informing its drivers, moved to a “variable base pay” rate, which varied by location, was not disclosed to drivers, and promised hours. was often less than
“Under the variable base pay approach, for more than two and a half years, Amazon secretly collected data about average tips in the field for an algorithmic set, an internal ‘base rate’ of its own contributions to drivers’ salaries.” reduced by using,” the FTC complaint [PDF] telling.
“The base rate varied by location and sometimes varied within the same market. But this algorithmically determined ‘base rate’ was often well below the $18-$25 per hour range that Amazon provided for drivers. promised at the time of enrollment and in the specific block offer.”
To make any difference between the base rate and the advertised minimum, Amazon is said to have used some or all of any tip left by customers to meet their payment commitment. For example, if Amazon set a base rate for an area at $12 and the customer left a tip of $6 through Amazon’s electronic tip collection system, the company paid the driver only $12 and the customer had to pay. Extended payment with tip instead of $6. $18.
To hide this calculation, Amazon displayed driver earnings in its Driver app as a combination of their base rate and any tip, rather than listing the two amounts separately. As described in the FTC complaint, Amazon did this intentionally and adopted a strategy to avoid communicating to drivers that their earnings had been affected by changes in its pay rate.
“Amazon employees also admitted internally that Amazon was using customer tips to subsidize drivers on their minimum payments, and that these subsidies were saving Amazon millions of dollars on drivers’ expenses,” the complaint states. . “In an August 2018 email, Amazon employees referred to the issue as ‘a huge PR risk to Amazon’ and warned of ‘Amazon reputation Tinderbox’.”
The complaint states that when a reporter questioned Flex Pay practices in February 2019, Amazon offered a response that dismissed the question. In May 2019, the FTC told Amazon that it was investigating the company’s Flex payment practices. Then in August 2019, Amazon announced the “Updated Earning Experience,” offering the same terms as its initial unfulfilled commitment—allowing drivers to keep 100 percent of any tips.
The $61.7m settlement represents the amount of tips that Amazon allegedly withheld from drivers and it allows Amazon to misrepresent drivers’ potential earnings and use the tips as compensation without prior driver consent. Prevents it from changing the way you do it. Those requirements would last 20 years and be subject to a civil penalty of $43,792 per violation.
FTC They say It will distribute funds to affected Flex drivers within six months of receiving payment and driver information from Amazon.
Amazon did not respond to a request for comment. ®