Lyft, Inc. Rotten Score Breakdown

The Federal Trade Commission announced enforcement action against Lyft in October 2024 alleging that the rideshare company used false and misleading advertising to recruit drivers by exaggerating how much they could expect to earn. The FTC alleged that during 2021 and 2022 Lyft advertised specific hourly earnings amounts to prospective drivers in cities across the United States. Examples cited by the FTC included advertisements suggesting drivers could earn up to $33 per hour in Atlanta, $41 per hour in Portland and $43 per hour in Los Angeles. According to the FTC, those advertised figures did not represent what a typical Lyft driver earned. Instead, the advertised hourly figures were based on earnings achieved by the top one-fifth of Lyft drivers. The FTC alleged that this caused the advertisements to overstate the earnings achieved by most drivers by as much as 30 percent. The Commission also alleged that Lyft included passenger tips when calculating advertised hourly earnings without clearly explaining that fact. The FTC said drivers could reasonably understand the advertised hourly amount as their earnings before tips rather than an amount already including tips. The complaint additionally challenged Lyft's advertising of "earnings guarantees." According to the FTC, drivers were led to believe some guarantees represented additional bonus payments when Lyft actually meant that it would pay only the difference between the driver's ordinary earnings and the advertised guaranteed amount. The FTC stated that Lyft continued making deceptive earnings claims after receiving a Notice of Penalty Offenses warning that misleading earnings representations were unlawful. The Justice Department filed the federal lawsuit and proposed settlement following referral from the FTC. Lyft agreed to a proposed $2.1 million civil penalty and restrictions requiring future earnings claims to be supported by evidence and based on typical driver earnings. The FTC's public case record currently lists the matter as Pending. Accordingly, Rotten Company records this matter as unresolved and describes the underlying conduct as allegations rather than adjudicated findings. Primary sources: Federal Trade Commission — FTC Takes Action to Stop Lyft from Deceiving Drivers with Misleading Earnings Claims: https://www.ftc.gov/news-events/news/press-releases/2024/10/ftc-takes-action-stop-lyft-deceiving-drivers-misleading-earnings-claims FTC Case — Lyft, Inc., U.S. v.: https://www.ftc.gov/legal-library/browse/cases-proceedings/222-3028-lyft-inc-us-v