Amazon ordered to pay $61.7m fine for stealing drivers’ tips as CEO Bezos steps down Q3 2021

*Our action returns to drivers the tens of millions of Dollars in tips that Amazon misappropriated, and requires the company to get drivers’ permission before changing its management of tips in the future ─Daniel Kaufman, Acting Director of FTC’s Bureau of Consumer Protection

*Amazon’s Chief Executive Officer Jeff Bezos will step down from his post in the third quarter of 2021

Alexander Davis | ConsumerConnect

For shortchanging drivers in entitled wages without first gaining their informed consent, Amazon will pay more than $61.7million to settle charges brought against it by the US Federal Trade Commission (FTC), alleging that the e-commerce company failed to pay Amazon Flex drivers the full tip amounts in tens of millions of Dollars they were given by the company’s clients.

It was gathered the sequel to the FTC complaint, Amazon only stopped taking the contracted drivers’ tips after becoming aware of the regulatory agency’s investigation.

Agency report says the money collected from Amazon will go toward drivers’ compensation.

The company had claimed drivers would receive “100 percent of the tips you earn while delivering with Amazon Flex”, but later changed the way it paid drivers, without alerting them, and pocketed their wages running into several millions of Dollars.

Daniel Kaufman, Acting Director of the FTC’s Bureau of Consumer Protection, said: “Rather than passing along 100 percent of customers’ tips to drivers, as it had promised to do, Amazon used the money itself.

“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.”

Amazon Flex is a service that hires delivery drivers as independent contracts who use their own vehicles to deliver packages.

Much like Uber and Grubhub, the drivers are hired as independent contractors, freeing the company from having to provide health insurance, paid vacations, scheduled pay increases, or vehicle maintenance and upkeep.

In 2016, Amazon dropped the rates it was paying drivers ─ which it promised would be between $18 and 25 per hour ─ and allowed customers tips to make up the difference, report stated.

The drivers should have received their full, promised wages as well as the tips simultaneously.

The drivers were reported to have sent hundreds of complaints to Amazon after they realised their earnings had decreased in the process.

In response, Amazon sent form letters promising drivers they would continue to receive “100 percent of their tips.”

However, the new pricing model was covered in media reports and continued to face scrutiny from drivers, but Amazon continued using it until 2019, when it became aware that the FTC was investigating the complaints.

Under Amazon’s settlement with the FTC, the company will have to pay the $61.7 million, and it is barred from further misrepresenting payment models and expectations to its employees.

The company also cannot change the pay of its drivers without first gaining their express informed consent henceforth, according to report.

Meanwhile Inc. Chief Executive Officer Jeff Bezos will step down from his post in the third quarter of 2021 and be replaced by Andy Jassy, Head of the company’s Cloud Computing Unit.

Bezos, 57, the company’s driving force since its founding, will become Executive Chairman, according to Amazon in a statement Tuesday.

Jassy, 53, for years has been seen as a potential successor to Bezos, who founded the company as an online bookstore from his Seattle garage more than 25 years ago and became one of the world’s wealthiest men.

Jassy’s likelihood as successor seemed inevitable last year when Jeff Wilke, who was the consumer business chief and was also seen as a CEO candidate, announced he’d be leaving this year.

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