It's been more than a year since federal regulators ordered Amazon toin drivers' tips it allegedly skimmed over the years. Now, a government prosecutor wants the e-commerce giant to compensate customers he says were also misled in the process.
Washington, D.C., Attorney General Karl Racine on Wednesday announced a lawsuit against Amazon that accuses the e-commerce giant of stealing tips from the e-commerce giant's delivery drivers and deceiving the customers about who was receiving gratuities.
"Consumers need to know where their tips are going. This suit is about providing workers the tips they are owed and telling consumers the truth," Racine said in a statement.
FTC suit against Amazon Flex
The Federal Trade Commission in February 2021 required Amazon to pay $61.7 million to drivers deprived of tips from customers between 2016 and 2019.
According to that complaint, Amazon Flex launched in 2015 in order to let ordinary people use their own vehicles to deliver packages on behalf of Amazon. The company claimed drivers could make $18 to $25 an hour and earn tips for certain deliveries, the agency said at the time. Amazon also told drivers it would "pass to you 100% of tips you earn" and told customers that "100% of your tips are passed on to your courier," according to the FTC complaint.
Soon after Amazon Flex launched, however, the company started skimming drivers' tips, the FTC claims. In late 2016, the company secretly switched to a variable-pay system in which drivers' earnings could fluctuate based on an internal algorithm, regulators allege. Under that system, the government said, Amazon could advertise a payment of "$18-$24" for a particular delivery, but if a customer tipped $6 Amazon would pay the driver only $12 (for a total payment of $18).
Amazon also discouraged customers from tipping in cash, with the app saying that "cash is not accepted upon delivery."
Amazon did not admit wrongdoing as part of the 2021 settlement.
While Amazon later reimbursed the Amazon Flex drivers as part of its agreement with the FTC, "It has thus far escaped appropriate accountability, including any civil penalties, for consumer harm," Racine said in filing his complaint in D.C. superior court.
Reached for comment, Amazon dismissed the latest legal filing.
"This lawsuit involves a practice we changed three years ago and is without merit — all of the customer tips at issue were already paid to drivers as part of a settlement last year with the FTC," a spokesperson said in an email.
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