Amazon will pay more than $ 61.7 million to Flex drivers, from whom it withheld the full tip amount from customers to end an investigation by the Federal Trade Commission.
The deal comes almost two years after the Los Angeles Times first exposed that Amazon was diving into tips from customers to cover the guaranteed base payment for Flex drivers, who deliver Amazon Fresh, Prime Now and other orders.
The money will reimburse Flex drivers whose tips Amazon has retained for the past 2 ½ years, according to the FTC.
Until August 2019, Amazon promised Flex drivers a guaranteed minimum payment for each order, which the e-commerce company said included 100% of the customer’s tips. However, as the Times reported, Amazon sometimes used tips to subsidize the company’s own pay to workers. In one case, a driver assigned to deliver an order to his own home paid $ 12. The minimum guaranteed payment for the order was $ 27. The driver received $ 30 in compensation for the order, which the company said included 100% of the tip. – showing that Amazon contributed only $ 18.
In May 2019, a few months after the payment model was revealed, the FTC notified Amazon that it was initiating an investigation and sought records on its payment policies for Flex drivers. According to the complaint, Amazon changed its tipping practice after knowing it was being investigated by the FTC. In August 2019, Amazon sent an email to drivers indicating that it would no longer use tips to subsidize the base salary and that the company would provide a full breakdown of how much workers were receiving for each order.
In addition to the $ 61.7 million deal, Amazon will be prohibited from making changes to the way drivers receive tips from customers without obtaining written consent from drivers and from falsifying the driver’s payment or tips. The FTC has asked Amazon Flex drivers to sign up for email updates on the status of the refund process.
“Today’s order offers substantial redress to families victimized by Amazon’s anti-competitive fraud,” wrote FTC commissioner Rohit Chopra in a statement. “However, this cannot be the only action we take to protect workers and their families from dominant intermediaries. The FTC will also need to carefully examine whether technology platforms are engaging in anti-competitive conduct that deceives workers and crushed law-abiding competitors. ”
In a statement, Amazon spokeswoman Deborah Bass objected that company policies deceived drivers.
“While we disagree that the historical way in which we report payment to drivers was unclear, we added additional clarity in 2019 and we are pleased to leave this matter behind,” said Bass. “Amazon Flex delivery partners play an important role in serving customers every day, which is why they earn among the best in the industry at more than $ 25 an hour on average.”