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The
agreement resolves a case filed by the U.S. Justice Department a
week ago in San Francisco federal court on Oct. 25 the same
day that Lyft disclosed it had negotiated the terms of the
settlement revolving around the same issues with the Federal
Trade Commission.
U.S. Magistrate Judge Peter Kang signed an order formalizing the
settlement Thursday before it was made publicly available
Friday. Besides having to pay $2.1 million, Lyft also has been
prohibited from engaging in the misleading practices flagged in
the case.
Both the Justice Department and Federal Trade Commission have
been investigating Lyft since uncovering evidence that it was
advertising inflated compensation rates while trying to to
recruit more drivers as the pandemic began to ease and
ride-hailing demand perked up.
The lawsuit alleged Lyft exaggerated the amounts that its
drivers could make in a variety of major U.S. cities from April
2021 through June 2022. Lyft advertised drivers could make more
than $40 per hour in cities such as San Francisco, Los Angeles
and Boston and more than $30 per hour in cities such as Atlanta,
Dallas and Miami.
But those figures were based on the earnings among the top 20%
of Lyft's drivers, leaving them unattainable for most others who
picked up passengers for the ride-hailing service, the lawsuit
alleged. much as $44 per hour in San Francisco.
The Justice Department will vigorously enforce the law to stop
companies from misleading Americans about their potential
earnings in the gig economy, Principal Deputy Assistant
Attorney General Brian M. Boynton said in a Friday statement.
Lyft has already changed many of the practices cited in the
lawsuit and is now overseen by a CEO, David Risher, who came on
board last year.
We agreed to this settlement because we recognize the
importance of transparency in maintaining trust in the
communities we serve, Lyft said last week when it first
disclosed the agreement with the Federal Trade Commission.
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