Please ensure Javascript is enabled for purposes of website accessibility

Amazon to Pay $61.7 Million in FTC Settlement Over Driver Tips

By Rich Duprey – Jun 10, 2021 at 11:13AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The e-commerce giant took the drivers' tips and used them itself.

Amazon (AMZN 1.43%) allegedly kept for itself over $61.7 million in tips earned by its Flex drivers and hid the practice from them for two years. It only changed how it paid the drivers when it became aware the Federal Trade Commission was investigating the company, according to an FTC administrative complaint.

Amazon agreed in February to settle the charges against it, and today the FTC announced it had approved a consent order against the e-commerce giant. Amazon will pay more than $61 million, which represents the total the company allegedly kept from its delivery drivers, and the FTC will reimburse the the workers. 

An Amazon driver placing a box by a door.

Image source: Amazon.

According to the complaint Amazon advertised its drivers could make $18 to $25 per hour, plus keep 100% of the tips they earned from customers.

But the FTC says, "Rather than passing along 100 percent of customers' tips to drivers, as it had promised to do, Amazon used the money itself."

Instead of paying the drivers the promised rate of pay plus tips, it paid the drivers a lower wage rate. Drivers began noticing their pay began to decline and despite receiving hundreds of complaints from drivers, Amazon issued form emails assuring them they were getting the full amount they were entitled to.

It only changed the pay policy in August 2019 when it received notice from the FTC it was investigating the allegations. 

In February, Amazon spokesperson Rena Lunak told CNBC, "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."

The consent order enjoins Amazon from violating the decree for 20 years making it subject to civil penalties of up to $43,792 per violation if they recur.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned, Inc. Stock Quote, Inc.
$114.61 (1.43%) $1.61

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.