Uber Will Pay $20 Million Fine for Misstating Drivers’ Incomes

No, you aren’t going to earn $90K a year driving for Uber in NYC.

Photo credit: Paul Sableman, CC BY 2.0.

I just visited Uber’s website, and although they list many reasons to become an Uber driver, estimated average earnings aren’t one of them.

This might be because the FTC just fined Uber $20 million for using inflated earnings numbers in its promotional material:

Uber Agrees to Pay $20 Million to Settle FTC Charges That it Recruited Prospective Drivers with Exaggerated Earnings Claims

The FTC alleges that Uber claimed on its website that uberX drivers’ annual median income was more than $90,000 in New York and over $74,000 in San Francisco. The FTC alleges, however, that drivers’ annual median income was actually $61,000 in New York and $53,000 in San Francisco. In all, less than 10 percent of all drivers in those cities earned the yearly income Uber touted. The FTC also alleges that Uber made high hourly earnings claims in job listings, including on Craigslist, but that the typical Uber driver failed to earn those advertised hourly amounts in various cities.

There are a few things that happen when you misreport drivers’ annual median income on your website. First, people who are thinking about driving for Uber get false information about how much they could earn. Second, that inflated income becomes news, as I quickly discovered when I tried to find out how much taxi drivers earned compared to Uber drivers:

Uber’s remarkable growth could end the era of poorly paid cab drivers

A major shift is underway on America’s roadways. For a long time, driving strangers from point A to point B paid terribly. Estimates of the typical cab driver’s salary hover around $30,000.

According to Uber, the median wage for an UberX driver working at least 40 hours a week in New York City is $90,766 a year. In San Francisco, the median wage for an UberX driver working at least 40 hours a week is $74,191.

That’s from the Washington Post, but the “Uber drivers make $90K” stat shows up in a lot of different news sources—and although those same sources write articles revealing that Uber drivers make less than Uber’s stated median income figures, not everyone is going to have Google Advanced Search open, scanning a bunch of WaPo Uber stories to look for conflicting numbers like I did.

But back to the $20 million fine. This penalty isn’t just for misstating potential earnings. The FTC also alleges that Uber misstated the costs involved in leasing cars through Uber:

The complaint also alleges that Uber claimed its Vehicle Solutions Program would provide drivers with the “best financing options available,” regardless of the driver’s credit history, and told consumers they could “own a car for as little as $20/day” ($140/week) or lease a car with “payments as low as $17 per day” ($119/week), and “starting at $119/week.” Despite Uber’s claims, from at least late 2013 through April 2015, the median weekly purchase and lease payments exceeded $160 and $200, respectively, the FTC alleges.

Ah, the joys of being an independent contractor for a large company that doesn’t allow you to negotiate rates but does give you the opportunity to pay them for the tools required to do your job. (Yes, I know that Uber drivers don’t have to lease cars from Uber. It’s still fascinating that Uber has found a way to get money out of both the drivers and the riders. Imagine if a company like Amazon Mechanical Turk or TaskRabbit charged workers a small monthly fee for the privilege of using the interface — which is totally a thing that might happen someday.)

What’s going to happen to the $20 million? The FTC has good news:

The $20 million will be used to provide refunds to affected drivers across the country.

I’m very curious to know which drivers will receive refunds, and how large those refunds will be.

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