WASHINGTON (DC News Now) — The attorney general of the District of Columbia has filed a lawsuit against Amazon, accusing the company of defrauding consumers about the tips they leave for delivery drivers.
The lawsuit, which was filed in the Superior Court of DC, seeks civil penalties against Amazon.com Inc. and Amazon Logistics, Inc. It stated that the defendants “solicited tips from its customers who placed orders for delivery by representing…that each dollar tipped would increase delivery driver compensation.”
Racine’s office accused Amazon through its Flex service of diverting a “significant portion of those so-called tips to subsidize its own labor costs” without giving drivers more of the money.
“Consumers provide tips and a company solicits tips. It’s important that those tips actually go to the worker,” said Graham Lake, the chief of worker’s rights and antifraud for the DC attorney general. “Between 2016 and 2019, Amazon Flex solicited tips that it instead diverted for its own purposes to subsidize its labor costs.”
Amazon officials could not be reached for comment.
The Seattle company, the lawsuit states, used more than $1 million in tips from DC consumers to pay for its own labor costs that began in 2016. But forced by the Federal Trade Commission, Amazon promised to stop the practice, according to the suit.
“Amazon deliberately chose not to inform drivers of the change in its tip policy that occurred in late 2016 and early 2017,” the lawsuit states. “Instead, Amazon changed the way it displayed tips to drivers so that drivers could no longer see how much each consumer had provided them.”
Brad Greenwood, an associate professor of information systems and operations management at George Mason University, said the ruse was quite clever
“The idea was actually you had variable pay which was contingent on the amount the tip came in,” he said. “And this is problematic because if people believe that they’re tipping and they’ll go on top of prevailing wages then that’s misrepresenting what’s happening to the consumer.”
Lake said this suit was needed to protect the consumer and drivers.
“Where the facts and law lead is where this office goes, and I think it’s been a priority from the beginning of Attorney General Racine’s tenure to the end that protects both workers and consumers,” he said.