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Important information

• Government Actions:

  Government Action: BBB reports on known government actions involving business’ marketplace conduct:

  Federal Trade Commission v Amazon.com
  

  The following describes a government action that has been resolved by either a settlement or a decision by a court or administrative agency. If the matter is being appealed, it will be noted below.

  On February 2, 2021, the Federal Trade Commission and Amazon entered into a Decision and Order to settle Federal Trade Commission charges that it failed to pay Amazon Flex Drivers the full amount of tips they received from Amazon customers over a two and a half year period.  Amazon has agreed to pay the Commission $61,710,583.00 which will be used to compensate Flex drivers.  In addition, Amazon will be prohibited from misrepresenting any driver’s likely income or rate of pay, how much of their tips will be paid to them, as well as whether the amount paid by a customer is a tip. Amazon also will be prohibited from making any changes to how a driver’s tips are used as compensation without first obtaining the driver’s express informed consent.

  Amazon neither admits nor denies any of the allegations in the Complaint, except as specifically stated in the Decision and Order.

  According to the FTC’s administrative complaint against Amazon and its subsidiary, Amazon Logistics, the company regularly advertised that drivers participating in the Flex program would be paid $18–25 per hour for their work making deliveries to customers. The ads, along with numerous other documents provided to Flex drivers, also prominently featured statements such as: “You will receive 100% of the tips you earn while delivering with Amazon Flex.   The complaint alleges, rather than passing along 100 percent of customers’ tips to drivers, as it had promised to do, Amazon used the money itself.

  Amazon Flex is a program in which drivers, classified by Amazon as independent contractors, can agree to make deliveries using their personal vehicles. Flex drivers deliver goods and groceries ordered through the Prime Now and AmazonFresh programs, which allow customers to give the drivers a tip.

  The FTC’s complaint alleges that, in addition to telling drivers they would receive 100 percent of their tips, Amazon also assured its customers that 100 percent of any tips they paid would go to the driver.

  In late 2016, the FTC alleges, Amazon shifted from paying drivers the promised rate of $18–25 per hour plus the full amount of customer tips to paying drivers a lower hourly rate, a shift that it did not disclose to drivers. Amazon used the customer tips to make up the difference between the new lower hourly rate and the promised rate. This resulted in drivers’ being shorted more than $61.7 million in tips.

  The FTC alleges that the company then intentionally failed to notify drivers of the changes to its pay plan and even took steps to make the changes obscure to drivers.  After making the change, the company continued to promise drivers and customers that 100 percent of tips would be passed through to drivers.  Amazon received hundreds of complaints from drivers after enacting the change, as drivers became suspicious when their overall earnings decreased. Drivers who complained received form e-mails falsely claiming that Amazon was continuing to pay drivers 100 percent of tips.

  According to the FTC’s complaint, Amazon continued using the new pricing model despite complaints from drivers and negative media coverage until August 2019—after the company received notice of the FTC’s investigation. At that time, Amazon returned to a pay model where it pays drivers an identified base amount plus 100 percent of tips and gives the drivers a breakdown of their pay and tips.

  Amazon drivers can sign up for email updates on the status of the refund process in the case here: https://public.govdelivery.com/accounts/USFTC/subscriber/new?topic_id=USFTC_155

  For more information, please contact Federal Trade Commission at www.ftc.gov or (202) 326-2222.

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• Government Actions:

  Government Action: BBB reports on known government actions involving business’ marketplace conduct:

  People of the State of California v Amazon.com
  

  The following describes a government action that has been resolved by either a settlement or a decision by a court or administrative agency. If the matter is being appealed, it will be noted below.

  On March 24, 2021, the Superior Court of the State of California County of San Diego, entered a Stipulated Final Judgment agreed to by District Attorneys from Alameda, Santa Clara, Riverside, San Diego, Santa Cruz and Yolo counties and Amazon.com, Inc.  The Stipulated Final Judgment requires Amazon to make changes and revisions to its “List” and “Was” pricing disclosures to explain the way it determines and validates it reference prices. These changes and revisions include a hyperlink to provide consumers clear definitions of the meaning of “Was” and “List” price advertisements, so they understand the nature of the advertised savings.  Amazon worked promptly and cooperatively throughout the District Attorneys’ investigation and has already implemented changes to its website and pricing algorithms consistent with the Final Judgment.

  Additionally, as part of the settlement, Amazon will pay a total of $2 million in penalties, costs, and restitution to the state’s Consumer Protection Trust Fund. The San Diego County District Attorney’s Office will receive $300,000 in costs and penalties. 
  
  Amazon worked promptly and cooperatively throughout the District Attorneys’ investigation and has already implemented changes to its website and pricing algorithms consistent with the Final Judgment.
  
  For more information, please contact the Office of the District Attorney County of San Diego at (619) 531-4040 or www.SanDiegoDA.com.