A US Federal Trade Commission (FTC) has discovered that Amaxon.com has held back gratuities meant for Flex delivery drivers for a period of two years. In the wake of this finding, Amazon.com will pay out in settlement a sum of US$61.7 million (51.3m Euro).
As said by the regulatory services on 02 January 2021, it is noted that, possibly the world’s largest online retailer expended a portion of the gratuities in order to make payment of the basic hourly rate for the on-demand package delivery platform. Amazon’s failure to do so was after promising all drivers ad shoppers that Flex drivers would be given 100% of the value of the tips.
Drivers were promised by Amazon that the payable rate would be in the range of US$18 to US$25 (Euro 15 to Euro 21) per hour and of course the full value on the tips they earned. Flex, which was launched in 2015 welcomes individual workers to deliver packages using their own vehicles.
In the latter part of 2016, unknown to the drivers and shoppers, Amazon began to pay the drivers a lower rate and furthermore expending the tips earned by them to bridge the gap.
Over a period of time, the drivers began to speculate as to why their overall pay had reduced and many of them made complaints to the company. The FTC, said employees described Amazon’s handling of the change as a “reputation tinderbox” and “huge PR risk”.
Amazons practice of diverting almost a third of the customer tips towards driver wages was only stopped once the FTC became aware and its probe in August 2019.
The FTC will utilize the US$61.7 million to compensate all drivers who lost out on their tips and this is under the terms of the settlement. Drivers are also in a position to sign up for email updates on the FTC’s website and follow the refund procedure.
“While we disagree that the historical way we reported pay to drivers was unclear, we added additional clarity in 2019 and are pleased to put this matter behind us,” Amazon spokesperson Rena Lunak said in an emailed statement.
“Amazon Flex delivery partners play an important role in serving customers every day, which is why they earn among the best in the industry at over $25 per hour on average.”
Under the settlement, Amazon will be prohibited from misrepresenting to drivers details about pay rates and tips. Talks are underway in anticipation of Amazon setting up a distribution center at Shannon Airport and also ready to lease a premise outside of Dublin as its first Irish accomplishment.
