Amazon.com Inc agreed to pay more than $61.7 million to settle allegations it cheated Amazon Flex drivers out of nearly one-third of tips from customers for more than two years, the Federal Trade Commission said on Tuesday.
The money paid to the FTC will be used to compensate drivers, reports Reuters citing the agency.
The FTC said Amazon in 2015 advertised that a program called Flex would pay drivers $18 to $25 an hour to make deliveries and that they would receive 100 per cent of any tips. But in late 2016 Amazon “secretly reduced its own contribution to drivers’ pay,” according to the FTC complaint.
“Amazon used the customer tips to make up the difference between the new lower hourly rate and the promised rate,” the FTC said in a statement.
The FTC said Amazon dropped the controversial payment model in August 2019 after the agency opened an investigation.
Amazon said it disagreed that the way it reported pay to drivers was unclear.
“In total, Amazon stole nearly one-third of drivers’ tips to pad its own bottom line,” Commissioner Rohit Chopra, a Democrat, said in a statement.
He urged the FTC to examine whether workers need to be protected from “other dominant middlemen.”