Does Prime Now Know if You Tip

A lot has been said most changes to the marketplace spurred past the gig economic system, but some things remain constant, including established truth-in-advertising principles. Amazon told delivery drivers in its Amazon Flex plan – too as customers who placed orders through services similar Prime Now and AmazonFresh – that 100% of tips would become directly to the drivers. Just co-ordinate to an FTC lawsuit, for a period of more than two years, Amazon secretly pocketed over $61 million of those tips. The FTC has appear a proposed settlement that will agree the visitor to its promises by returning the entire $61.7 one thousand thousand to Amazon Flex drivers.

In 2015, Amazon launched Amazon Flex, a service through which people can sign up as delivery drivers. Categorizing drivers as independent contractors, Amazon paid them a flat charge per unit based on the number of deliveries fabricated inside an allotted time. But for services similar Prime Now and AmazonFresh, the company told prospective drivers they too would get customers' tips and touted the extra money every bit a benefit of making those deliveries.

For example, in the FAQ section of the required Amazon Flex App, the company claimed, "For Prime Now, AmazonFresh, and shop deliveries, the client can choose to tip. Y'all will receive 100% of the tips you earn while delivering with Amazon Flex." In its Terms of Service, Amazon reinforced that message: "Amazon will pass through any tips payable to you."

What's more, Amazon conveyed that same bulletin to customers. During the cheque-out process for eligible orders, Amazon told customers that "100% of tips are passed on to your courier." Amazon was articulate that direct cash payments weren't allowed. So the simply selection for a customer who wanted to tip the driver was to include the tip as role of the Amazon-controlled check-out process.

At the start of the Amazon Flex program, the company paid drivers at least $18 per hour plus 100% of client tips. But in late 2016, the FTC says Amazon made cloak-and-dagger changes to the programme without telling drivers or customers. Rather than passing 100% of tips on to drivers, Amazon pocketed about a 3rd of each tip to kickoff the guaranteed minimum Amazon promised to drivers. Equally the complaint explains information technology, "[F]or a one-hour block offering $18-$25, if Amazon's base rate in the particular location was $12, and the customer left a $6 tip for the driver, then Amazon paid the commuter just $12 and used the full customer tip of $6 to attain its minimum payment of $18 to the driver." In other words, despite representations to drivers and customers, Amazon took a sizable portion of the tips customers expressly earmarked for drivers and used the money to reduce its own labor costs.

You'll want to read the complaint for details, only the FTC alleges that Amazon took steps to conceal its change in policy. Amazon didn't tell drivers about the change to their compensation and continued to tell them and customers that 100% of tips would go to drivers. According to the FTC, 1 footstep Amazon took to hide its bear was to stop separately listing drivers' tips and instead reported their earnings as a single lump sum.

When drivers began to suspect what was going on and complained to Amazon, the visitor responded with a canned email reply that it was providing drivers with "100% of client tips," without explaining it was actually paying drivers less than promised and making upward the deviation with their tips. Equally drivers took to social media to voice their concerns, the issue became a topic of internal discussion at the company, with employees describing it as "a huge PR run a risk for Amazon" that created "an Amazon reputation tinderbox." All the while Amazon represented to customers that "100% of tips are passed on to your courier." According to the lawsuit, Amazon continued these practices for over two and a half years, changing its carry only later the FTC opened its investigation.

In add-on to the $61,710,583 financial remedy which the FTC will use to compensate eligible drivers, the proposed settlement prohibits Amazon from misrepresenting – among other things – what it will pay drivers, what a driver is likely to earn, and the percentage or amount of client tips a driver will receive. In addition, Amazon can't modify the extent to which the company uses drivers' tips toward what Amazon pays them without first getting drivers' express informed consent.

Once the proposed settlement appears in the Federal Register, the FTC will have public comments for 30 days. In improver, Amazon drivers tin can sign up for e-mail updates on the status of the refund process.

What can other companies accept from the case?

When advertizement gig opportunities at your business organisation, be transparent virtually material terms. Explain upwards front of import information about pay, tips etc. If you change the nature of the deal, be clear about that, as well. Concealing what'south going on behind the scenes is an unwise strategy.

Substantiate your claims – express or implied – nearly tipping. In addition to deceptive claims pitched to drivers, Amazon misled customers by stating that "100% of tips are passed on to your courier." How would customers accept responded if Amazon had told them the truth: "We siphon off xxx% to encompass our costs and pass on what's left to your courier"? Similar other objective claims about production attributes, operation, or toll, companies also must live up to their representations about tipping policies and practices.

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Source: https://www.ftc.gov/business-guidance/blog/2021/02/amazon-pay-61-million-tapping-tips-promised-drivers

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