Back in June, the Federal Trade Commission filed a lawsuit against e-commerce giant Amazon for secretly withholding millions of dollars in tips from its delivery drivers. Amazon recently settled the case, agreeing to pay out over $60 million in late reimbursement to over 140,000 of its employees.
The tips withed from drivers of the Amazon Flex program date back as far as 2016. The average reimbursement amount is said to be $422. Though, the FTC states that the highest amount recorded was more than $28,000!
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The Amazon Flex program falsely advertised paying its independent contractors 100% of tips they’d receive from consumers. Amazon also promised an hourly pay rate of $18-$25. Though, the Federal Trade Commission’s 2016 investigation of the e-commerce company revealed that both these promises were not being upheld. According to the agency’s press release, Amazon had begun lowering the pay rate of members within the Flex program, unbeknownst to its drivers.
More so, Amazon would not disclose the full tip amount granted to its drivers by their customers. They would, instead, pocket nearly a third of said tip and use it to subsidize their driver’s hourly rates. While Amazon had been misappropriating tip funds for two and half years, the organization only stopped these illegal practices when the FTC began its investigation in 2019.
“Rather than provide drivers 100% of tips in addition to the range it offered drivers in a delivery block, Amazon treated the bottom of the range as its guaranteed minimum payment and often used drivers’ tips to meet that minimum,” the Federal Trade Commission’s lawsuit reads, “In the App, Amazon then displayed driver earnings as the combined total of its base rate and any customer tip—it did not separately display to drivers the amount of any customer tip.”
Drivers are said to receive their reimbursement from the FTC by January 7 of next year. The agency is set to send out approximately 139,507 checks and 1,621 payments through PayPal.
While the FTC may have put Amazon in time out, the company is still thriving. According to Forbes, Amazon’s sales have skyrocketed fifteen percent this year, despite a fifty percent dip in net profit compared to 2020. Since the end of September, the company’s year-to-date revenue went up to twenty-eight percent, with its sales sitting at $332 billion.
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Sources: Federal Trade Commission, USA Today, Forbes
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