SAN FRANCISCO — Uber Technologies is paying $20 million to settle allegations that it duped people into driving for its ride-hailing service with false promises about how much they would earn and how much they would have to pay to finance a car.
The agreement announced Thursday with the Federal Trade Commission covers statements Uber made from late 2013 until 2015 while trying to recruit more drivers to expand its service and remain ahead of its main rival, Lyft.
The FTC alleged that most Uber drivers were earning far less in 18 major U.S. cities than Uber published online. Regulators also asserted that drivers wound up paying substantially more to lease cars than the company had claimed.
“Many consumers sign up to drive for Uber, but they shouldn’t be taken for a ride about their earnings potential or the cost of financing a car through Uber,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection.
In a statement, Uber said it’s pleased to resolve the dispute.
“We’ve made many improvements to the driver experience over the last year and will continue to focus on ensuring that Uber is the best option for anyone looking to earn money on their own schedule,” the San Francisco company said.
Most of the proceeds from Uber’s settlement will be paid out to drivers. Documents filed in San Francisco federal court didn’t spell out how many people will get a cut of the settlement or what the average payment will be.
Uber has grown into a cultural phenomenon largely by undercutting the prices typically charged by taxis with rides that can be quickly summoned on its smartphone app.
To ensure cars are widely available, Uber has persuaded hundreds of thousands of people in the U.S. to become drivers by dangling the lure of making money at any time that’s convenient for them. The drivers are treated as independent contractors, another contentious issue because the classification excludes them from many of the benefits and protections given to full-time employees.
