May 18, 2024


It's the Technology

D.C. attorney general files lawsuit against Amazon, alleging stolen tips

D.C. attorney general files lawsuit against Amazon, alleging stolen tips


D.C. Attorney General Karl A. Racine on Wednesday announced that his office had filed a consumer protection lawsuit against Amazon, alleging that the e-commerce giant stole tips from drivers and deceived consumers about the tipping model.

The lawsuit alleges that Amazon used deceptive methods to lead consumers to believe that tip money went directly to drivers, when it actually was being used to subsidize wages. (Amazon founder Jeff Bezos owns The Washington Post.)

“Workers in the District of Columbia and throughout our country are too often taken advantage of and not paid their hard-earned wages,” Racine said in a statement. “What’s more, consumers need to know where their tips are going. This suit is about providing workers the tips they are owed and telling consumers the truth. Amazon, one of the world’s wealthiest companies, certainly does not need to take tips that belong to workers.”

The lawsuit concerns Amazon Flex, a service launched in 2015 that offers quick deliveries. When it was launched, the company encouraged consumers to tip delivery drivers and assured that 100 percent of the tip would go to the drivers.

According to the lawsuit, in 2016, Amazon changed the model so drivers could no longer see the tip amounts from each delivery, and a large portion of the tips were instead used to pay wages already promised to the drivers. The lawsuit further alleges that the company deceived consumers and workers about the model by hiding the reality of the tip policy.

An Amazon spokesperson said in an email that the lawsuit was without merit, adding that the company had changed its model in 2019 and that it had a compensation framework that ensures D.C. drivers earn more than the District’s minimum wage.

In 2021, Amazon reimbursed the Amazon Flex drivers as part of a settlement with the Federal Trade Commission (FTC) and agreed to a nationwide injunction that prohibits the company from changing the way driver tips are handled without notifying drivers in advance.

“Nothing is more important to us than customer trust. This lawsuit involves a practice we changed three years ago and is without merit — all of the customer tips at issue were already paid to drivers as part of a settlement last year with the FTC,” Amazon spokeswoman Maria Boschetti said in a statement Wednesday.

Racine argued that the company has not yet been held accountable for “consumer harm” violations of D.C.’s Consumer Protection Procedures Act (CPPA), which prohibits deceptive and unfair business practices, such as misleading consumers.

The attorney general’s office is seeking civil penalties for each violation of the CPPA, payment to the District for costs of the case and a court order to ensure that the company cannot engage in the practice again.

This is the second lawsuit Racine has filed against the industry giant. In 2021, his office filed an antitrust complaint against the company, alleging that Amazon held monopoly power that resulted in higher prices for consumers. A D.C. Superior Court judge dismissed the antitrust suit earlier this year.

In April, the OAG and the U.S. Department of Justice both urged the court to reconsider its dismissal of the antitrust lawsuit against Amazon. Then in August, the Office of the Attorney General filed a notice of appeal. The city and Amazon must submit their arguments to the D.C. Court of Appeals by the end of January before the case moves forward.