Amazon will pay $61.7 million to settle claims it withheld tips from delivery workers

https://www.nbcnews.com/tech/tech-news/amazon-will-pay-617-million-settle-claims-withheld-tips-delivery-worke-rcna244?cid=sm_npd_nn_fb_ma&fbclid=IwAR21FWTe4RTSrmx16_AkYo3Ij6s-zkVgpaXr-WS6vkMl7OHiF-J9BUEfzbA

Feb. 2, 2021, 12:02 PM EST
By Annie Palmer, CNBC

Amazon will pay $61.7 million to settle allegations by the Federal Trade Commission that it failed to pay Flex delivery drivers the full amount of tips received from customers.

The commission voted 4-0 in favor of the settlement, which was announced Tuesday. In the complaint, the FTC alleges that Amazon in 2016 shifted from paying drivers the promised rate of $18 to $25 per hour, plus tips, to paying drivers a lower hourly rate.

Amazon “intentionally failed” to notify drivers of this change and used the tips to make up the difference between the promised rate and the new lower hourly rate, according to the FTC.

“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, in a statement. “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.”

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The settlement comes as on-demand delivery services DoorDash and Instacart have also attracted public scrutiny for their tipping practices.

Last November, DoorDash reached a $2.5 million settlement with the attorney general of the District of Columbia over claims it misled consumers and pocketed workers’ tips. Washington, D.C. Attorney General Karl Racine announced charges against DoorDash after his office found the company used customers’ tips to offset the minimum payment owed to workers. DoorDash said in 2019 it had changed its tipping model.

Similarly, Racine in August of last year filed a lawsuit against Instacart, claiming the company deceived customers into thinking an optional service fee would be collected as a tip for workers and pocketed it for itself instead.