Amazon to pay nearly $4M to settle lawsuit alleging it took tips from drivers
Amazon has agreed to pay nearly $4 million to settle charges that the e-commerce company subsidized its labor costs by taking tips its delivery drivers received from customers, District of Columbia Attorney General Brian L. Schwalb said Friday.
The settlement came four years after Amazon forked over $61.7 million to resolve a complaint the Federal Trade Commission brought over similar accusations.
In 2022, the office of DC's attorney general at the time followed up with a lawsuit alleging Amazon violated the District's consumer protection laws by misleading residents about how tips paid digitally were used.
According to the lawsuit, the affected drivers were part of Amazon's Flex business, which allows people to deliver Amazon packages with their own cars.
DC's lawsuit said that after launching the program in 2015, the company represented to consumers that all tips added during check-out for Amazon Flex orders would go to drivers.
But both the District and the FTC alleged that Amazon changed its payment model in late 2016 to lower its costs but did not disclose the switch to either customers or drivers.
In particular, the FTC's previous complaint alleged the company algorithmically reduced its own wages for drivers in different locations using data it collected about average tips in a specific area. Amazon then used the tips to make up the difference between its new base pay and the $18-25 per hour it had promised drivers, the complaint said.
The FTC said Amazon didn't stop taking the tips until 2019, when the company found out about the agency's investigation into the issue.
Amazon has denied the allegations and did not admit to wrongdoing as part of the settlement announced Friday.
'Like any successful program, Amazon Flex has evolved over time, and this lawsuit relates to a practice we changed more than five years ago,' Amazon spokesperson Steve Kelly said in a statement.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Miami Herald
2 hours ago
- Miami Herald
Amazon's latest big bet may flop
Science does not understand consciousness; this is an unsolved problem. Consciousness is possible with little to no intelligence, but there is no such thing as intelligence without consciousness. If you don't understand something, can you recreate it? I don't think it is likely to happen. How many neurons does an ant have? According to the University of Arizona News, a desert-harvesting ant species has about 90,000 or so brain cells. How did this question make you feel? Did it make you angry, surprised, or curious? Normally, if we are not under pressure, and there will be no negative outcome, if we are asked something we can't answer, there is no negative emotional reaction to it. Related: Veteran fund manager reboots Palantir stock price target If you are told something incorrect and genuinely understand the truth, you will not react angrily. Let's say someone tells you that the sky is brown. You might get worried about that person's health or question their intentions, but you shouldn't get angry. If a person's belief is questioned, we can expect an adverse reaction, especially if the belief is important and the argument against it is convincing. Sometimes we mix up what we know and think we know, but it is still a belief we have. When I first heard of Amazon's (AMZN) "Just Walk Out" system, I immediately saw the scene from a Silicon Valley TV show in which Jared hired a "click farm" in India to generate fake user activity for his company's website. I was convinced this Amazon system was a huge number of Indians doing the work and not an "AI." It turned out I was right. A lot of companies have been put into a tough spot by the tariff war. Amazon is no exception, and CEO Andy Jassy tried to explain how he plans to handle the situation during the company's first-quarter earnings call. "It's hard to tell what's going to happen with tariffs right now. It's hard to tell where they're going to settle and when they're going to settle. And so, a lot of what we're thinking about short and medium term actually turns out to be what we think about long-term too, which is, how do we actually have the broadest possible selection for customers at the lowest possible prices?" stated Jassy. Related: Samsung Galaxy phones add creepy AI feature It seems that the real answer is to create savings in Amazon's logistics. The company recently introduced a Vulcan robot, which, from what I've seen, is an advanced packing machine. Amazon calls it a robot because it sounds so much cooler. It is a good machine, and it probably saves the company a lot of money. After all, it can work for 20 hours straight without stopping. But it is not a robot replacing humans. It is a machine that helps them waste less time. Recently, an AI tech startup, Builder AI, backed by Microsoft, went bankrupt. They were building an AI platform that would make creating applications as "easy as ordering pizza". Even if you are not familiar with the story, you should be able to figure out where I am going with this. Real people were writing the code, not AI. This is what happens when companies start believing their marketing, and even the big ones are not immune to it. More Retail: Huge retail chain closing more stores soon (locations revealed)Struggling drugstore chain announces second bankruptcyBeloved discount grocery chain has massive US plans Amazon seems to be set in the direction of repeating the mistake of "Just Walk Out" deception. This time, it's betting it will make huge savings on logistics. Unconfirmed media reports suggest that Amazon is developing software for humanoid robots that could eventually be used in its delivery operations. According to the reports, Amazon is creating a "humanoid park" closed-course environment to test the humanoid robots before testing them on real streets. Based on this information, Morgan Stanley analyst Brian Nowak gave us his opinion. Related: Nvidia, Dell announce major project to reshape AI The analyst previously estimated that Amazon is working on automating its fulfillment costs (approximately 18.6% of retail revenue) and that every 10% of US units that go through new robotics-enabled warehouses can drive between $2 billion and $3 billion of annual savings in 2030. "New headlines support our previous views that Amazon is also taking steps to automate its shipping and last-mile logistics (which also make up 17.5% of retail revenue). The potential timing of these humanoids may admittedly be further out, but when we combine this with autonomous long-haul and last mile trucking, and drones, we see a path over the next 5-10 years where Amazon is set to be able to deliver more items to more people faster and in a more cash flow generative manner," said Nowak and his team. "This should enable AMZN to invest in price and technology to drive further share gains, while also delivering more free cash flow for shareholders." Morgan Stanley analysts maintained Amazon's overweight rating, with a price target of $250. I expect that if the "robots" launch, humans will remotely control them. Whether or not this leads to actual savings is another thing. Related: Popular cloud storage service might be oversharing your data The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Bloomberg
5 hours ago
- Bloomberg
Major League Baseball Is Growing Again. Why Isn't Its TV Money?
TV ratings and in-game attendance are up, but the league is about to take a pay cut on its media rights. By and Hannah Miller Save Good afternoon from Los Angeles, and a special hello to those of you who watched one of the greatest tennis matches ever. Warner Bros. Discovery has gotten some grief for mishandling the NBA negotiations, among other things, but its inaugural presentation of Roland Garros was a marked improvement on recent years. Live sports has been swallowing the entertainment business for years, and it feels even more significant now. Football, once less popular than Survivor and ER, now accounts for the majority of the 100 most-watched broadcasts on TV in the US. Amazon and Comcast are cutting back on entertainment programming after splurging on basketball rights. Rupert Murdoch, often ahead of the curve, sold his Hollywood studio — and kept his news and sports businesses.
CNET
7 hours ago
- CNET
Snag the Roku Ultra 4K Streaming Device for a Near Record Low Price
Whether you're ready to binge some new shows or you're focused on baseball season, these days the options for streaming to your TV seem nearly endless. Roku is a tried and true brand and the maker of some of our favorite streaming devices. Roku offers a number of products, but right now you can pick up the 2024 Roku Ultra for just $1 more than the lowest price we've seen. Currently down to just $80 on Amazon, that saves you $20 on this remote and streaming box combo. The Roku Ultra is at the top end of Roku's lineup and has all the features you're likely to need from a streaming device. Those features include support for 4K streaming, not to mention HDR with Dolby Vision. There's also support for Dolby Atmos for those with compatible audio systems. Hey, did you know? CNET Deals texts are free, easy and save you money. That isn't all. This Roku Ultra comes with a rechargeable Roku Voice Remote Pro which does more than let you control what you're watching. Plug in the included earbuds to watch your favorite shows without disturbing others, making the Roku Ultra the perfect solution for late-night bedroom TV viewing. The remote also includes quick-launch buttons for popular streaming services like Netflix, Apple TV Plus, Prime Video and Paramount Plus. This deal is unlikely to stick around for long -- be sure to factor that into your buying decision before the price goes back up. Why this deal matters Regularly priced at $100, saving 20% on the cost of this combo streaming device is a decent savings. In his review of the Roku Ultra, editor Ty Pendlebury noted that this version has some upgrades over the previous model, most of them focused on the remote. At full price he found it a bit spendy, but at $80 it becomes much more of a contender. Last year during Black Friday sales, we saw the price dip to $79 -- a record low. If you don't want to wait it out to save a dollar, now is as good a time as any to upgrade. Looking for new content to enjoy on your new Roku Ultra? Check out our list of the best streaming deals before signing up anywhere else.
