The Federal Trade Commission has fined Amazon of USD 62 million for withholding tips meant for Flex delivery drivers. According to findings of the agency, the e-commerce giant skimmed USD 61.7 million meant for its drivers. The company continued stealing tips for almost two and a half years. Commissioner Rohit Chopra said that Amazon kept around one-third of the amount meant for tips to pad its own bottom line. The FTC said that the amount paid by the company will be used to reimburse Flex delivery drivers whose money was withheld. The exact number of drivers affected is not clear.
Daniel Kaufman, acting director of the agency’s Bureau of Consumer Protection, said that Amazon did not fulfill its promise of passing along 100 percent of customers’ tips to Flex drivers. “Rather than doing so, the company used the amount itself,” Kaufman said in a statement. Flex was formed by Amazon in 2015 with the sole purpose of having drivers – who are hired on a contract and not as full-time employees. These drivers pick up and deliver orders of Prime Now, Amazon Fresh, and others with their own cars. It soon became an attractive gig economy position as the company offered a high base pay of USD 18 to USD 25 per hour. It also promised to pay 100 percent of customer tips to drivers.
But an investigation in 2019 found that these drivers were paid the base wage as promised, but Amazon was using money meant for their own tips to pay it. According to the investigation, Amazon used an opaque payout system that kept drivers in dark and did not disclose the breakdown of total earnings. Following an investigation by the FTC, Amazon announced in 2019 that it would give drivers a complete breakdown of their earnings and confirmed that they will receive 100 percent of their tips over and above their base pay. This is not the first time when a company is under the scanner for stealing tips from employees. Earlier, Instacart and DoorDash too were accused of similar practices. DoorDash had to pay USD 2.5 million to settle the accusation.