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Amazon to pay Flex drivers $61.7 million after US trade body finds company had withheld tips

Federal Trade Commission says Amazon used customer tips to subsidise drivers' base pay. Jeff Bezos company will now have to get drivers' permission before changing policy on tips.

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New Delhi: E-commerce giant Amazon will pay Flex drivers $61.7 million to settle a US Federal Trade Commission (FTC) investigation into the company over its withholding of “the full amount of customer tips”. The FTC also said Amazon is now barred from “misrepresenting driver pay or customer tips”.

This comes soon after Jeff Bezos announced that he will be stepping down as the CEO of Amazon this year.

“Rather than passing along 100 percent of customers’ tips to drivers, as it had promised to do, Amazon used the money itself,” said Daniel Kaufman, acting director of the Federal Trade Commission’s (FTC) Bureau of Consumer Protection. “Our action today returns to drivers the tens of millions of dollars in tips that Amazon misappropriated, and requires Amazon to get drivers’ permission before changing its treatment of tips in the future,” he added.

As the e-commerce giant advertised in its 2015 Amazon Flex programme — that allows independent contractors to carry out AmazonFresh and Prime Now deliveries using their private vehicles — drivers were to be paid $18-$25 per hour and allowed to keep 100 per cent of the tip. Conclusion of the FTC investigation shows that this deal was not followed through. It was in late 2016, owing to a “variable pay system”, that the company began dipping into the driver’s pay.

The step comes nearly two years after Los Angeles Times reported how Amazon dips into tips to cover the base pay for drivers.

Tips to subsidise base pay

Reports suggested that upon learning about the FTC investigation that began in 2019, Amazon sent out an email to drivers about how it will no longer “use tips to subsidize the base pay and that the company would give a full breakdown of how much workers were being paid for each order”.

The company’s spokesperson Deborah Bass said, “While we disagree that the historical way we reported pay to drivers was unclear, we added additional clarity in 2019 and are pleased to put this matter behind us. Amazon Flex delivery partners play an important role in serving customers every day, which is why they earn among the best in the industry at over $25 per hour on average,” she said.

Besides this redressal, FTC also aims to “carefully examine whether tech platforms are engaging in anticompetitive conduct that hoodwinks workers and crushes law-abiding competitors.”

Also read: Delhi HC directs Future Retail to maintain status quo on Reliance deal that Amazon objected to


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