Hunton Retail Law Resource

In a 2-1 vote on January 19, 2017, with Commissioner Ohlhausen dissenting, the FTC took action against Uber Technologies for allegedly making exaggerated claims about potential earnings and the costs of Uber’s Vehicle Solutions Program. Uber has agreed to pay $20 million in driver redress to resolve these charges.

According to the FTC’s complaint, Uber recruited drivers by claiming that they could earn specific hourly and annual rates, but that, despite these claims, many Uber drivers failed to earn the median amounts. For example, the FTC alleged that fewer than 10 percent of Uber drivers in Minneapolis earned the $18 per hour Uber advertised in its ads.

As an additional recruitment method, Uber offered a “Vehicle Solutions Program” to connect potential drivers with car companies that sell or lease vehicles for use. The FTC alleged that in many instances, Uber drivers who utilized the Vehicle Solutions program “received worse than industry average rates, made payments for hundreds of dollars more per month than advertised, and entered into leases imposing costs for mileage.”

Under the terms of the settlement, Uber is enjoined from misrepresenting and must substantiate (1) the income a (potential) driver is likely to earn, (2) the terms of financing or leasing a vehicle (whether offered by Uber or another entity), or (3) the terms and conditions of any vehicle program. In addition to the $20 million payment, Uber also is subject to certain compliance reporting and record keeping obligations.

Commissioner Ohlhausen disagreed with the $20 million redress calculation, stating that, rather than relying on partial disgorgement of profits, the FTC should have considered a much smaller figure of consumer harm.