Amazon settles claims it pocketed delivery drivers' tips

amazon parcelsImage source, Reuters

Amazon has agreed to settle allegations it cheated some drivers out of tips from customers for more than two years.

Under a deal with the US Federal Trade Commission (FTC) the e-commerce giant, owned by billionaire Jeff Bezos, will pay out $61,7m.

The issue concerned drivers working as part of Amazon's Flex programme, an Uber-like on-demand delivery service.

Amazon said it disagreed with some findings but was happy to put the matter behind it.

The FTC said the money will be used to compensate drivers.

Flex drivers, who use personal vehicles to deliver for Amazon, had received hourly rates between $18-$25 and were promised 100% of tips.

But in late 2016 Amazon "secretly reduced its own contribution to drivers' pay," according to the FTC. "Amazon used the customer tips to make up the difference between the new lower hourly rate and the promised rate."

The commission said Amazon dropped the controversial payment model in August 2019 only after it opened an investigation.

Amazon said it disagreed with claims that the way it was paying drivers was unclear. "We added additional clarity in 2019, [but] we are pleased to put this matter behind us," an Amazon spokeswoman said.

However, the FTC said Amazon also misled customers by telling them that drivers received 100% of any tip.

When drivers noticed that tips appeared to be missing, Amazon simply responded that it gave drivers "100% of customer tips," the FTC said in its complaint.

"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.

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