Amazon to pay US$61.7 million to settle charges of withholding driver tips

Amazon has agreed to pay US$61.7 million to settle charges it withheld tips from its independent delivery drivers over two and a half years, US officials said Tuesday.

The US Federal Trade Commission said the agreement settles a complaint that Amazon failed to give the full tip amounts to drivers in its Amazon Flex programme.

“Rather than passing along 100% of customers’ tips to drivers, as it had promised to do, Amazon used the money itself,” said Daniel Kaufman, acting director of the FTC’s Bureau of Consumer Protection.

“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.”

The settlement bars Amazon from misrepresenting driver earnings, pay or percent of tips paid to drivers, or changing its handling of tips without drivers’ consent, the FTC said.

Amazon is one of several e-commerce firms that have been accused of misappropriating tips while promising to give the full amounts to drivers.

According to the FTC’s administrative complaint, the company regularly advertised that drivers participating in the Flex program would be paid US$18 to US$25 per hour along with “100% of the tips you earn”.

In late 2016, the FTC alleged, Amazon shifted to a lower hourly rate without disclosing this and used the customer tips to make up the difference. This resulted in hundreds of complaints from drivers, according to the agency.

The company reverted to its previous policy in August 2019 after the FTC began its investigation, according to the complaint.

An Amazon spokesman said in response to an AFP query: “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.”

The company said its drivers “play an important role in serving customers every day, which is why they earn among the best in the industry at over US$25 per hour on average”.