By By Jonathan Stempel
(Reuters) -Lyft agreed to pay a $2.1 million civil fine to settle U.S. government charges it misled prospective drivers about how much money they might earn working for the ride-hailing company.
A proposed settlement was filed on Friday in San Francisco federal court, and requires a judge’s approval.
The case stemmed from advertisements that Lyft (NASDAQ:LYFT) began placing in 2021, to address a driver shortage it referred to internally as a “supply crunch” as growing access to COVID-19 vaccines boosted demand for its services.
According to the U.S. Department of Justice, Lyft’s ads featured hourly earnings based on the top 20% of drivers, which meant most drivers were unlikely to earn the advertised pay.
The Justice Department said Lyft’s ads also featured “earnings guarantees” that misled drivers into believing they would receive guaranteed amounts as bonuses. Tens of thousands of drivers have complained about these guarantees, it said.
Lyft did not admit or deny wrongdoing in agreeing to settle. It did not immediately respond to a request for comment.