FTC Announces Settlement with Uber over Allegedly Deceptive Earnings Claims; Commissioner Ohlhausen Dissents
In its latest action involving allegedly deceptive earnings claims, the FTC announced yesterday that Uber had agreed to settle charges that it misled potential drivers with inflated earnings claims. The complaint also alleges that Uber misrepresented benefits of its Vehicle Solutions Program, which connects potential drivers with auto companies to buy or lease a vehicle to be used to pursue the Uber opportunity.
To supports its allegations, the FTC cited a former post on Uber’s website that claimed that uberX Drivers’ “median income is more than $90,000/year/driver in New York and more than $74,000/year/driver in San Francisco.” However, according to the complaint, actual median incomes were significantly less in those cities -- $29,000 less in New York and $21,000 less in San Francisco. The complaint also cites allegedly inflated per hour earnings claims made for other major cities across the United States. According to the FTC’s analysis of Uber’s data, typically only between 10-30% of drivers made as much as the quoted hourly rate in a particular city.
The complaint also alleges that Uber made misrepresentations about its Vehicle Solutions Program to induce consumers to sign up as a driver. These claims included “own a car for as little as $20/day” and enter into a lease with “unlimited miles.” The FTC alleged that Uber lacked any basis for making these claims and that Uber actually had information at the time suggesting these claims were false. For example, the FTC suggested that actual payments made by consumers were significantly higher than those represented and that many leases imposed significant mileage limits.
In her dissent, Commissioner Ohlhausen explained that she did not see the monetary settlement of $20 million as tied to any estimate of consumer harm and asserted that settlements for partial disgorgement of profits, as here, are “inappropriate for a non-fraudulent enterprise that significantly benefits consumers.” Commissioner Ohlhausen also seemed to question whether certain representations were misleading in the first place, suggesting that the complaint erroneously “suggests that the sole acceptable description of earnings potential is the median earnings of participants.” She also contended that the complaint unjustifiably excluded certain incentive and promotional payments from the FTC’s calculations of earnings.
The case is a reminder for entities making earnings claims that such claims should be substantiated prior to making the claim, and not false or misleading in the context in which they are made. It’s worth emphasizing that the FTC never alleged that Uber drivers don’t make money, or that the Uber drivers would have been better off never pursuing the opportunity. For the two Commissioners in the majority, the discrepancy between actual and represented earnings was enough to support a Section 5 violation and the $20 million monetary settlement.