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Uber ordered to pay $20m in fines following (probably last ever) FTC investigation into dishonest advertising

By Paul Bradley Carr , written on January 23, 2017

From The Legal Affairs Desk

You might have missed it, what with the world ending and all, but this past Thursday, Uber agreed to pay a total of $20m to drivers in 18 US cities after making false claims about the earning potential. 

The fine was imposed following an FTC investigation into a series of Craiglist ads posted in early 2015. Per the BBC:

Between January and March 2015, ride-sharing service Uber put out ads on Craigslist in the hope of attracting new drivers by offering attractive hourly rates of pay.

In Boston, for example, it told potential drivers they would earn $25 an hour.

In truth, fewer than 10% of drivers in the city actually managed to bring in that amount, according to a lawsuit brought by the US Federal Trade Commission.

In separate statements pushed out to the media and posted on its own site, Uber said “the potential income a driver on UberX can make in a year is more than $90,000 in New York and more than $74,000 in San Francisco”.

The FTC said the median amount earned in those cities - for drivers working a 40 hour week - was significantly less ($29,000 and $21,000 less, respectively).

To make matters worse, the FTC also found that Uber was charging some drivers an average of $200 a week for leases on their cars. That money was automatically deducted from their ride reciepts. 

We've written before about how little Uber cares about fines, even multi-million dollar ones. This is, after all, a company with a $66bn valuation. So long as the company isn't forced to change its fundamental relationship with its drivers -- say by treating them as actual employees, with actual benefits -- then its underlying business model holds and it can keep paying chump change fines from here to kingdom come. 

Still, critics of Uber should make the most of this tiny victory. The odds of any future FTC investigation against Uber, or any other kind of action by the federal government, are about to drop to almost zero. 

In the coming days Donald Trump will announce his pick for new chair of the FTC. According to Politico, the favorite for the job is Utah Attorney General Sean Reyes. Reyes has hitherto shown little public interest in the tech world beyond agreeing with his fellow Republicans that Google should be investigated for anti-trust issues. Such an investigation would no doubt be music to Travis Kalanick's ears: Google is, after all, a big potential rival to Uber's own self-driving car plans. Oh and Reyes also received a $10,000 campaign donation from Facebook not long after promising to ‘spend whatever it takes’ to outlaw gay marriage.

Still, regardless of who the replacement FTC chair is, the new President has made clear that he intends to scale back federal oversight and regulation of corporations, a plan which will surely include such a high profile American success story as Uber.

Leaving nothing to chance, though, Uber's Travis Kalanick recently agreed to join Trump's advisory team, a decision which prompted protesters to chain themselves to the doors of Uber's San Francisco HQ this past weekend.

(Perhaps in return for Trump making future FTC investigations go away, Kalanick could give the new president some advice on how to get away with being investigated by one federal agency and using agents of another to smear critics, all while your closest advisors boast of their closeness with Vladamir Putin. Peas in a pod!)