Lyft Inc. has been ordered to pay a $2.1 million civil penalty after the Justice Department and the Federal Trade Commission (FTC) concluded that the ride-hailing company was misleading drivers about potential earnings. The settlement and a permanent injunction aim to prevent Lyft from continuing such deceptive practices.

Lyft's business hinges on its ability to recruit drivers through adverts promising bountiful earnings. Yet, it was found that the high hourly earnings figures were achievable by the top 20% of drivers and included tips. The civil complaint, filed in the U.S. District Court for the Northern District of California, notes that Lyft tried to further lure drivers with "earnings guarantees," as per the U.S. Department of Justice, which did not disclose that drivers were only paid the difference between what they earned and the guaranteed amount, not the full amount on top of their existing wages.

"The Justice Department will vigorously enforce the law to stop companies from misleading Americans about their potential earnings in the gig economy," stated Principal Deputy Assistant Attorney General Brian M. Boynton, according to a U.S. Department of Justice press release. FTC's Director Samuel Levine added, "Lyft drivers deserve accurate information about how much they will be paid for the work they do," signaling a commitment to fairness in the gig economy, as quoted in the same release.

Similarly, the FTC has accused Lyft of inflating its earnings claims by as much as 30%, according to a separate press release by the Federal Trade Commission. Apart from the payment, the proposed settlement includes requirements for Lyft to back any earnings claims with evidence, notify its drivers clearly about the terms of any “earnings guarantee” offers, and separately report tips in their hourly earnings figures. "It is illegal to lure workers with misleading claims about how much they will earn on the job," FTC Chair Lina M. Khan expressed in the FTC press release, emphasizing the agency's role in preventing the exploitation of American workers.