The US Federal Trade Commission (FTC) [official website] announced [press release] on Thursday that Uber Technologies [corporate website] agreed to pay $20 million to settle a claim that the ride-hailing company had engaged in misleading tactics to recruit new drivers. According to the FTC’s complaint [text, PDF], Uber exaggerated the potential earnings a driver could make, as well as the lease rates that a driver could obtain through the company’s Vehicle Solutions Plan [website]. In a 2-1 vote to authorize the complaint, which was filed in the US District Court for Northern District of California [official website], the FTC also authorized a stipulated order [text, PDF] for permanent injunction in which Uber agrees not to engage in deceptive recruiting tactics. The $20 million settlement will be used to provide affected drivers with a refund, according to Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Many consumers sign up to drive for Uber, but they shouldn’t be taken for a ride about their earnings potential or the cost of financing a car through Uber,” said Rich. “This settlement will put millions of dollars back in Uber drivers’ pockets.”

With the rapid growth of companies like Lyft [corporate website] and Uber, ride-sharing services have been among the most controversial business models [JURIST backgrounder] in recent history. Last April Uber settled a lawsuit [JURIST report] brought by 385,000 drivers in California and Massachusetts regarding their status as independent contractors. In several states, ride-sharing companies have met significant legal opposition, frequently led by competitors such as the taxi industry. Other unresolved questions [JURIST backgrounder] surrounding this new business model continue to prompt debate among lawmakers. Although some cities and states, such as California, have developed new laws [PC360 report] mandating certain insurance for ride-sharing drivers, others have resisted. In June 2015, Attorney General of New York Eric Schneiderman announced a $300,000 settlement [press release] with Lyft after they were charged with violating local regulations in Rochester and Buffalo.