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Amazon agrees to pay $62 million to settle drivers' tip case

Amazon agrees to pay $62 million to settle drivers' tip case
© Amazon Day One

Amazon has agreed to pay more than $61.7 million to settle allegations that it stole tips from Amazon Flex drivers over a 2 1/2-year period, the Federal Trade Commission (FTC) announced Tuesday.

All funds from the settlement will be distributed among affected drivers, the FTC said.

The gig work program was advertised as paying drivers $18 to $25 an hour and letting them keep all tips they received from deliveries.

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“Rather than passing along 100 percent of customers’ tips to drivers, as it had promised to do, Amazon used the money itself,” Daniel Kaufman, acting director of the FTC’s Bureau of Consumer Protection, said in a statement.

The agency’s complaint argues that in late 2016 Amazon began using tips to make up the difference when it shifted to a lower hourly pay rate.

The company stopped the practice in August 2019 after learning about the FTC’s investigation, the complaint claims.

In addition to the payout to Flex drivers, Amazon will be prohibited from making any changes to how tips are used as compensation without getting affirmative consent from drivers.

An Amazon spokesperson told The Hill that while the company disagrees that its payment structure was unclear it is “pleased to put this matter behind us.”

The settlement is the first major enforcement action since President Biden took office.