Amazon has agreed to pay nearly $4 million to settle charges that the e-commerce company subsidized its labor costs by taking tips its delivery drivers received from customers, District of Columbia Attorney General Brian L. Schwalb said Friday.
The settlement came four years after Amazon forked over $61.7 million to resolve a complaint the Federal Trade Commission brought over similar accusations.
In 2022, the office of DC’s attorney general at the time followed up with a lawsuit alleging Amazon violated the District’s consumer protection laws by misleading residents about how tips paid digitally were used.
According to the lawsuit, the affected drivers were part of Amazon’s Flex business, which allows people to deliver Amazon packages with their own cars.
DC’s lawsuit said that after launching the program in 2015, the company represented to consumers that all tips added during check-out for Amazon Flex orders would go to drivers.
But both the District and the FTC alleged that Amazon changed its payment model in late 2016 to lower its costs but did not disclose the switch to either customers or drivers.
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