Amazon sued by DC attorney general for defrauding drivers

Today, as Amazon deals with a site-wide outage affecting thousands of customers, District of Columbia Attorney General Carl Racine filed a lawsuit against the online shopping giant for defrauding its customer base. In a press release, Racine said Amazon still defrauded D.C. consumers by “stealting” a portion of Amazon Flex delivery driver tips between 2016 and 2019 and “surreptitiously” diverting millions to “reduce their own labor costs and increase profits.” must pay. “

Amazon has already paid $61.7 million in restitution to Amazon Flex drivers following an investigation by the Federal Trade Commission. But Racine said Amazon “has so far escaped any relevant liability, including any civil penalties, for consumer harm.” In its complaint filed in the District of Columbia Superior Court, Racine is seeking “civil penalties for misrepresentations and omissions to consumers related to these deceptive dipping practices” so far.

“When a company is caught stealing from its employees, it is not enough for the company to pay the stolen amount,” Racine said in his complaint. “Stealing from employees is theft, and significant penalties are needed to seriously discourage this illegal behavior.”

A spokeswoman for the Racine office told Ars that Amazon has three weeks to respond to the lawsuit. Amazon spokeswoman Maria Boschetti told Ars.

“Nothing is more important to us than customer trust,” Boschetti told Ars. “This claim involves a practice we changed three years ago and is unfounded. All of the customer tips in question have already been paid to drivers as part of a settlement with the FTC last year.

Racine’s complaint alleges that Amazon violated D.C.’s Consumer Protection Procedures Act (CPPA) by “lying to consumers that tips would be fully passed on to Amazon Flex drivers and that workers’ compensation would be increased.” Because customers received no refunds from the FTC settlement, Racine’s complaint says it is now up to the court to “send a clear message to employers not to divert tips for their own gain.”

Amazon’s tip evasion scheme worked by quoting the driver a guaranteed minimum payment and then replacing that payment with tips rather than tipping above the minimum payment. To ensure that Amazon paid the least amount out of pocket, the complaint alleges that the company even tested models with different default tip options and ultimately chose an amount that caused customers to cover as much of the cost as possible with tips. Racine’s complaint said that “the consumer’s ‘tip’ makes no difference to the driver’s take-home pay” and that the drivers only noticed it was happening because they “saw their take-home pay decrease.” The FTC reported that the highest amount of tips ever charged to an Amazon Flex driver was “more than $28,000.” The average amount for tips charged was $422.

According to the FTC, Amazon agreed in a 2021 settlement that it would never misrepresent any driver’s pay rate or likely income, “how much their tips will be paid to them” or “whether the amount paid by the customer is a tip.” should not be done. The FTC also prohibited Amazon from “making any changes to the use of driver tips as compensation without the express informed consent of the driver.” Amazon has until 2041 to comply with these nationwide orders.

Racine’s concern is that Amazon has made no guarantees to customers that it will not engage in such deceptive practices. In his complaint, he notes that before, during and after billing, Amazon never failed to tell customers that 100 percent of tips would go to drivers. Sometimes that was true, but it wasn’t for three years, and no enforcement action has been taken to prohibit “unfair and deceptive trade practices in the offer, sale and supply of consumer goods and services.”

The DC attorney general asked the court to declare that Amazon violated the CPPA. If found in violation, Racine is asking the court to award any unsecured restitution, as well as civil penalties, as a penalty to prevent Amazon from committing any future CPPA violations. That’s the only way to “dissuade Amazon and other merchants from soliciting tips from DC consumers to subsidize their labor costs,” the complaint says.

“Consumers need to know where their advice is going,” Racine said in a press release. “This suit is about giving employees the advice they are owed and telling consumers the truth. Amazon, one of the richest companies in the world, certainly doesn’t need to take advice when it comes to employees. Amazon can and should do better.”

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