SAN FRANCISCO (AFP) - Uber has agreed to pay US$20 million (S$28.5 million) to settle charges that the ride-sharing company exaggerated claims about driver pay and new car financing, US regulators said on Thursday (Jan 19).
The money paid by Uber Technologies will be used to provide refunds to affected drivers in the United States, according to the Federal Trade Commission.
"Many consumers sign up to drive for Uber, but they shouldn't be taken for a ride about their earnings potential or the cost of financing a car through Uber," FTC bureau of consumer protection director Jessica Rich said in a release.
An FTC complaint accused Uber of exaggerating income potential in certain cities to attract new drivers, and making the terms of its vehicle-financing program appear more attractive than they were.
Uber had claimed that uberX drivers' median annual incomes topped US$90,000 in New York and US$74,000 in San Francisco, when the actual amounts came to US$61,000 and US$53,000 respectively, the FTC said.
The complaint also contended that while Uber claimed that its Vehicle Solutions Program provided the best financing options available, drivers received worse deals on average when it came to interest rates and leasing terms.
While negotiating the settlement, Uber held firm that its approach to calculating incomes differed from the FTC's, saying the company had no intention of deceiving prospective drivers.
Uber has recently stopped using an outside partner for financing vehicles in favor of an in-house program to better oversee the process.
"We're pleased to have reached an agreement with the FTC," an Uber spokeswoman said in an email response to an AFP inquiry.
"We've made many improvements to the driver experience over the last year."
Along with having to pay US$20 million, Uber is barred from misrepresenting driver pay or terms for the financing of leasing vehicles, according to the FTC.
Drivers' advocates welcomed the settlement.
"The reality of being a ride-sharing driver is a far cry from the rosy picture these apps describe," said Jim Conigliaro, founder of the Independent Drivers Guild, which says it represents 45,000 Uber drivers in New York City.
"It is encouraging to see the FTC take them to task and refund drivers."