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February 2, 2021
5 minutes read

Amazon To Pay $62M Fine For Withholding Driver Tips

The e-commerce giant Amazon has agreed to pay a monetary penalty of $61.7 million levied by the US Federal Trade Commission (FTC) over…

The e-commerce giant Amazon has agreed to pay a monetary penalty of $61.7 million levied by the US Federal Trade Commission (FTC) over charges that it withheld tips doled out by customers to drivers of its Flex delivery program. The fine represents the full amount that Amazon is charged with withholding from drivers and will be used by the FTC to compensate the drivers for their entitled tips.

The penalty levied by the FTC covers a two and a half year period that Amazon is said to have failed to pass ON 100% of the tips doled out by customers to drivers despite advertising to drivers and customers that it’ll do so. The company appears to have misled both drivers and the tipping customers who thought that the tips they gave out were going to the pockets of the drivers they tipped as additional pay.

In its case, Amazon made use of customer tips to make up for promised base pay to drivers rather than dole out the promised pay itself and add the tips as a complement to its drivers’ payments. The case reminisces that of DoorDash, the popular food delivery service that was found to have used customer tips to make up for promised base pay for its couriers and recently agreed to $2.5 million settlement for a legal case brought against it in Washington DC.

Basically, Amazon is charged with withholding the sum of $61.7 million in tips from its drivers and has been ordered to reimburse that amount. It sort of marks the nth time that the e-commerce giant has run into issues and allegations of dodgy activity in its labor practices.

Amazon has also agreed to not make any changes to how drivers’ tips are doled out without a driver’s express informed consent.

“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 FTC’s 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.”

For affected drivers in Amazon’s tipping case, the FTC has set up a portal (link here) to sign up and receive e-mail updates on the status of the tip refund process.

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