Being rich and wealthy isn't enough - they have to steal from the workers making them rich.
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AG Racine Sues Amazon for Stealing Tips from Delivery Drivers & Lying to Consumers Through Illegal Scheme to Boost Profits
Amazon Used Tips Intended for Workers to Reduce Labor Costs, Developed Secretive Internal Payment Model to Hide Truth from Drivers & Lied to Customers Through Dishonest Marketing Materials
WASHINGTON, D.C. – Attorney General Karl A. Racine today announced a new lawsuit against Amazon.com, Inc. and Amazon Logistics, Inc. (Amazon) for stealing tips from delivery drivers through a deceptive, illegal scheme that tricked consumers into thinking they were increasing drivers’ compensation when Amazon was actually diverting tips to reduce its own labor costs and increase profits.
“Workers in the District of Columbia and throughout our country are too often taken advantage of and not paid their hard-earned wages,” said AG Racine. “What’s more, consumers need to know where their tips are going. This suit is about providing workers the tips they are owed and telling consumers the truth. Amazon, one of the world’s wealthiest companies, certainly does not need to take tips that belong to workers. Amazon can and should do better.”
In 2015, Amazon launched its Amazon Flex service, which offers quick deliveries of Amazon products through Amazon delivery drivers. The company currently serves tens of thousands of consumers in the District, filling thousands of orders on a weekly basis. During the checkout process, Amazon encouraged consumers to tip their delivery drivers, offering a default preselected tip amount and assuring consumers that 100% of the tip amount would go to the drivers. In 2016, Amazon changed its driver payment model so that a large portion of these tips did not go towards increasing drivers’ compensation but were instead used to pay a portion of what Amazon had already promised to pay the driver. Amazon continued to assure consumers that 100% of tips would go to drivers despite the fact that the company was secretly using these tips to subsidize its own labor costs and increase profits.
Amazon also implemented a widespread campaign, both internally and externally, to hide the truth about their tip policy from both consumers and workers. They repeatedly told consumers, both in advertisements and during the checkout process, that 100% of tips would go to drivers when this was not the case. And instead of informing drivers of the changes to its tip process, Amazon changed the way it displayed tips to drivers in the app so that drivers could no longer see the amount each consumer tipped. When hundreds of drivers caught on and asked Amazon why they were suddenly receiving less money overall for their deliveries, Amazon responded with misleading, boilerplate language that excluded any mention of this change in policy.
As a result of its deceptive tactics, Amazon experienced significant cost savings. In the years Amazon had this policy in place, consumers in D.C. paid millions of dollars in tips to reward their delivery drivers for providing a valuable service. Meanwhile, Amazon used much of those tips to save on its own operating costs, thereby deceiving both District consumers and Amazon Flex drivers.
While Amazon later reimbursed the Amazon Flex drivers as part of a settlement with the Federal Trade Commission (FTC), it has thus far escaped appropriate accountability, including any civil penalties, for consumer harm.
The District’s Consumer Protection Procedures Act (CPPA) prohibits a broad range of deceptive and unfair business practices, including misleading consumers, making misrepresentations, and failing to disclose important information about products or services. OAG alleges that Amazon violated the CPPA by:
- Lying to consumers about whether tips would be fully would be passed on to Amazon Flex drivers and increase worker compensation.
- Consumers commonly understand a tip to be a monetary amount paid by a consumer to a worker, which increases worker pay by the consumer-designated amount.
- Amazon specifically represented to consumers that “100% of your [the consumer’s] tip goes to your courier [referring to the Amazon Flex driver]” while failing to inform consumers that the tips would in fact subsidize its share of payments to Amazon Flex drivers.
- Consumers commonly understand a tip to be a monetary amount paid by a consumer to a worker, which increases worker pay by the consumer-designated amount.
With this lawsuit, OAG is seeking:
- Civil penalties for every violation of the CPPA and the costs the District incurred by bringing this case;
- A Court order to ensure that Amazon is never able to engage in the practice again.
The full complaint is available here.
This matter is being handled by Assistant Attorneys General Palmer Heenan, Sarah Levine, and Jessica Micciolo under the supervision of Section Chief Graham Lake of the Workers’ Rights and Antifraud Section of OAG.
Protecting DC Consumers
In 2015, AG Racine launched a dedicated Office of Consumer Protection to stand up for DC consumers and protect them from deceptive and unethical business practices. Since then, the office has become a leader in educating residents about their rights, investigating consumer complaints, and filing lawsuits against predatory lenders, scammers, and other businesses and individuals that take advantage of residents. In total, OAG has secured more than $125 million in penalties, restitution for consumers, and other payments through lawsuits and legal action since 2015. Learn more about OAG’s consumer protection victories here.
OAG also assists DC residents by mediating disputes between consumers and businesses when they file a complaint to OAG. In the last seven years, the office has received more than 13,000 complaints and has helped recover more than $2 million through the mediation process for residents who submitted complaints. In 2021, OCP received more than 2,500 consumer complaints—more than any previous year. When OAG receives more complaints from residents, the office can help more people, identify more bad actors, and make the market work better for DC residents.
