Amazon has agreed to shell out a hefty $3.95 million to settle accusations that it played fast and loose with the tips that customers thought were going to its delivery workers. Attorney General Brian L. Schwalb made the announcement, stating this sum will resolve the lawsuit, which claimed Amazon deceived consumers by pocketing a share of the gratuities meant for its Amazon Flex delivery drivers. The company had given assurances that 100% of customer tips would boost drivers' pay, but it turns out Amazon used a portion of those tips to subsidize its promised base wages instead.
In a statement made by the Office of the Attorney General, Schwalb emphasized the need for businesses to face "meaningful consequences" to prevent such misconduct. "When companies mislead customers to boost their profits by stealing tips intended for their workers, they are cheating their consumers, their employees, and their competitors who play by the rules," Schwalb said. The agreement not only covers the financial restitution but also requires Amazon to disclose clearly how tips are being used, ensuring such misleading tactics aren't repeated.
The OAG first filed the suit back in 2022, alleging Amazon's practice was in direct violation of the District's consumer protection laws. Amazon, which had already reimbursed drivers as part of an earlier settlement with the Federal Trade Commission, faced additional pressure from OAG to cease their deceptive and unlawful behavior, ultimately leading to the current settlement. As part of the deal, Amazon is mandated to maintain transparent tipping practices. If they put tips towards anything other than increasing driver compensation, they've got to lay out exactly how they're using that money on both its website and app.
Assistant Attorneys General and a team consisting of investigators and interns were the ones who handled this matter for the OAG. The settlement includes $2.45 million in penalties and $1.5 million in costs to cover the litigation. For those in the District interested in reporting unfair business practices or wage violations, the OAG's website offers resources and contact information to support consumers and workers in protecting their rights.
