Amazon Faces Another Lawsuit For Allegedly Taking Tips From Drivers

The attorney general of Washington D.C. is suing Amazon for allegedly using delivery driver tips to cover payroll costs.

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The attorney general of Washington D.C. is suing Amazon for allegedly stealing tips from delivery drivers. The office of District of Columbia AG, Karl Racine, claims the e-commerce giant misled customers who were under the impression that tips would go to delivery drivers, while Amazon was allegedly using these gratuities to cover delivery driver pay, as Bloomberg reports.

The lawsuit comes on the heels of a settlement that Amazon reached with the U.S. Federal Trade Commission in 2021, after the agency filed suit against Amazon for these tip-stealing practices. The FTC suit said Amazon was not, indeed, passing on the full amount that customers gave to Flex drivers, despite clearly stating that “100% of tips are passed on to your courier.” Amazon never did agree that its pay practices were unclear, but ended up paying $61.7 million to settle the case, and said the money would go to its Amazon Flex drivers. After the settlement, the FTC sent out checks and payments via PayPal to drivers who had their tips taken away; the highest returned amount totaled $28,255.

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The attorney general is now bringing another suit against Amazon, seeking civil penalties for violating consumer protection statutes. The AG is citing last year’s settlement as proof that Amazon is using deceptive and illegal practices to increase profits, but Amazon considers the matter closed due to the settlement.

The FTC found Amazon was keeping driver tips from late 2016 through late 2019, and the D.C. attorney general says Amazon has “escaped appropriate accountability” so far, according to Reuters. The AG went on to say:

When a company is caught stealing from its workers, it is not enough for the company to repay the amount stolen. Stealing from workers is theft, and significant penalties are necessary to strongly disincentivize this unlawful conduct.

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Bloomberg notes the same attorney general sued Amazon last year for engaging in anticompetitive practices, which he claimed ultimately drove up prices for consumers, but a judge threw out the case for lack of evidence. The AG could be trying to revive the case with this latest legal challenge, as Bloomberg suggests.

But the allegations against Amazon and the subsequent settlement is telling. In other words, Amazon could very well be guilty of one of the most distasteful practices in the “gig economy” whereby businesses take tips and use them to subsidize their payroll.

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The difference, in this case, is that Amazon is not a small business, nor a local restaurant struggling to stay afloat; Amazon is the biggest online retailer in the world, owned by one of the richest people in the world, Jeff Bezos. It stands to reason that Amazon can afford to pay its delivery drivers without having to take their tips.

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