Amazon has agreed to pay $61.7 million to settle allegations that it stole its Amazon Flex drivers tips over a two-and-a-half year period, the Federal Trade Commission said on Tuesday.
"Today, the FTC is sanctioning Amazon.com for expanding its business empire by cheating its workers," FTC Commissioner Rohit Chopra wrote in a statement. "Amazon stole nearly one-third of drivers’ tips to pad its own bottom line."
The $61.7 million represents the total amount that Amazon allegedly withheld until it became aware of an investigation by a Federal Trade Commission in 2019.
“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,” Deborah Bass, a Amazon spokesperson told Motherboard. “Flex delivery partners play an important role in serving customers every day, which is why they earn among the best in the industry at over $25 per hour on average.”
Amazon Flex Drivers, who are independent contractors, deliver packages and groceries for Amazon and Whole Foods in more than 50 U.S. cities. As independent contractors, workers provide their own vehicles and do not receive healthcare benefits, sick pay, overtime pay, worker's compensation, or other benefits guaranteed to Amazon employees.
When Amazon launched its Flex program in 2016, the company regularly advertised that independent contractors who deliver packages in its Flex program would receive "100% of the tips" they earned and would be paid between $18 and $25 an hour, according to the FTC complaint. But shortly after it launched, Amazon quietly changed course and began slashing its payments to drivers and cutting into their tips to make it appear as if it was still paying the promised hourly rate, according to the FTC.
"This theft did not go unnoticed by Amazon’s drivers, many of whom expressed anger and confusion to the company," Chopra wrote. "But, rather than coming clean, Amazon took elaborate steps to mislead its drivers and conceal its theft, sending them canned responses that repeated the company’s lies."
According to the FTC complaint, drivers who complained about their earnings received formulaic email responses—falsely asserting that Amazon had continued to pay drivers 100 percent of their tips. Amazon used this model until 2019, when the company received notice of the FTC's investigation. At that time, it began to give drivers a breakdown of both their pay and tips.
In addition to the $61,710,583 Amazon must pay to compensate shorted drivers, the company will be prohibited from misleading drivers about their expected pay, the percentage of their tips that will go to them, and what qualifies as a tip.
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Last year, Motherboard reported that Amazon was running a social media monitoring program to spy on the private social media groups of its Amazon Flex drivers in the United States and Europe, and collect data on their posts. The company promised to discontinue the program following Motherboard's report.
Amazon isn't the first tech company to come under heat for pocketing its gig workers tips, though it may be the most profitable. Last year, the food delivery platform DoorDash paid $2.5 million to settle a lawsuit alleging that it had stolen drivers’ tips and misled customers to believe their tip money was going to drivers, and Instacart came under federal scrutiny for its tipping policies.