Lyft pays $2.1 million to settle case alleging the ride-hailing service deceived drivers
Lyft is paying $2.1 million to settle a lawsuit accusing the ride-hailing service of exaggerating how much money drivers could make while the company was trying to recover from a steep downturn in demand during the pandemic
SAN FRANCISCO — Lyft is paying $2.1 million to settle a lawsuit accusing the ride-hailing service of exaggerating how much money drivers could make while the company was trying to recover from a steep downturn in demand during the pandemic.
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
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