Amazon has been ordered to hand tens of millions of dollars to delivery drivers after its was found to be pocketing their tips for over two years.
The US Federal Trade Commission forced the ecommerce giant to hand $61.7 million to Amazon Flex delivery drivers.
Amazon Flex drivers, who work on a freelance basis similar to Uber drivers, should receive “100 per cent of the tips” they earn according to Amazon’s advertising.
The tips should come on top of the $18 to $25 earned by drivers per hour, which is paid in “blocks” usually lasting three to four hours.
According to the FTC, Amazon began using driver tips to make up minimum earnings for drivers in 2016, instead of adding it to their wages.
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Drivers were not notified of the changes made to their pay, and Amazon is understood to have only stopped the practice after it came under investigation in 2019.
“Rather than passing along 100 per cent of customers’ tips to drivers, as it had promised to do, Amazon used the money itself,” the FTC’s bureau of consumer protection Daniel Kaufman said.
“Our action today returns to drivers the tens of millions of dollars in tips that Amazon misappropriated, and requires Amazon to get drivers’ permission before changing its treatment of tips in the future.”
In response, Amazon said: “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 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.”
Amazon Flex drivers have become an increasingly important part of Amazon’s delivery network over the past year, with the majority of drivers delivering Prime Now and Amazon Fresh grocery orders which have skyrocketed during the pandemic.