“Rather than passing along 100 percent of customers’ tips to drivers, as it had promised to do, Amazon used the money itself,” Daniel Kaufman, acting director of the FTC’s Bureau of Consumer Protection, said in a statement.
Amazon’s tip-reimbursement policy was not vague, spokeswoman Rena Lunak said in a statement.
“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,” Lunak said.
(Amazon chief executive Jeff Bezos owns The Washington Post.)
Internally, Amazon employees worried that disclosure of the company’s handling of driver tips could ignite an “Amazon reputation tinderbox,” and turn into “a huge PR risk to Amazon,” the FTC disclosed in announcing the fine.
The agency alleged Amazon advertised that contract drivers in its Flex program, which delivers goods for its Prime Now and AmazonFresh services, would receive $18 to $25 an hour and keep 100 percent of the tips, which customers pay through the Amazon app.
The FTC alleges Amazon changed the way it paid drivers in late 2016, lowering the hourly rate and then used customer tips to make up the difference. Amazon continued to tell drivers they were receiving all of their tips, even after receiving hundreds of complaints from drivers, the agency said.
The FTC said it will refund all of the payments to drivers who were shorted. Law precludes the agency from additionally fining the company, FTC Commissioner Noah Joshua Phillips said during a news conference Tuesday. But the settlement opens Amazon to monetary fines if it engages in skimming tips again.