Originally published 2021-11-05.
In November 2021 the US Federal Trade Commission began sending almost $60 million to more than 140,000 Amazon Flex delivery drivers. The money covered customer tips that, according to the FTC, Amazon had quietly kept between late 2016 and August 2019 instead of passing them on in full. Most drivers received a paper check; a smaller group was paid through PayPal. The average payment was $422, and the largest topped $28,000.
Below is a clear account of what happened, how the refunds worked and what the case means for gig workers and for anyone who leaves a tip in an app.
What Amazon Flex is
Amazon Flex is a programme that lets independent contractors use their own vehicles to deliver Amazon packages and groceries in blocks of time they choose. During the period covered by the case, many Flex drivers handled orders from Prime Now and AmazonFresh, the company's fast delivery and grocery services. Customers using those services could add a tip for their courier, and Amazon told them that all of it would reach the driver.
What the FTC said Amazon did
According to the FTC's consumer alert, customers were promised that "100% of tips are passed on to your courier." The agency alleged that from late 2016 Amazon instead used part of those tips to cover drivers' guaranteed base pay, effectively lowering the hourly rate it paid while counting customers' generosity toward it. Drivers were not told about the change.
The FTC said the practice ran for about two and a half years and stopped only after Amazon learned of the agency's investigation in 2019. In 2021 the FTC brought a case against Amazon.com and its subsidiary Amazon Logistics. Contemporary reports describe Flex recruitment ads at the time as promising roughly $18 to $25 an hour.
The settlement in 2021
Amazon settled in February 2021, agreeing to pay $61.7 million, the full amount the FTC said had been withheld, and the order was finalised in June 2021. Beyond the payment, the settlement placed lasting limits on how the company can treat drivers. Amazon may not:
- misrepresent how much a driver is likely to earn or the pay rate on offer;
- misrepresent how much of a tip the driver will receive, or whether a customer's payment is a tip at all;
- change how tips are used in driver compensation without the driver's express, informed consent.
Amazon did not accept the agency's description of what had happened. A spokesperson quoted in news coverage said the company disagreed that its past pay reporting was unclear, but was "pleased to put this matter behind us," adding that Flex drivers earn among the best rates in the industry.
How the refunds were paid
The FTC announced the payouts on 2 November 2021. Its figures break down as follows:
- 139,507 checks totalling about $59.4 million;
- 1,621 PayPal payments totalling about $172,000;
- an average payment of $422, with the single largest at $28,255;
- full repayment of withheld tips for every driver who lost $5 or more.
Checks had to be deposited or cashed by 7 January 2022, a deadline that has now passed. Drivers whose refund was $600 or more, about 20,000 people, also received an IRS Form 1099, because the money counted as income on their 2021 tax return. Questions were handled by the refund administrator, Rust Consulting.
It is worth keeping the figures straight, since headlines mixed them up. The $61.7 million was the settlement amount; the "nearly $60 million" was what actually went out in this round of payments. The $422 average describes the whole group, so many individual drivers received much less or much more depending on how many tipped deliveries they had made.
Why the case mattered
The case was about honesty in the gig economy rather than minimum wage rules. Flex drivers are classed as independent contractors, so many protections that apply to employees do not cover them. The FTC used its power to act against deceptive business practices: customers and drivers had been told one thing about where tip money went, and something else happened.
That approach has broader relevance. Many delivery and ride-hailing apps blend a base payment, incentives and tips into a single figure. If a platform quietly counts tips toward a guaranteed minimum, a customer's extra money can end up subsidising the company rather than rewarding the worker. The Flex settlement made clear that such arrangements must be disclosed and agreed to, not hidden.
Practical lessons for drivers and customers
If you drive for a delivery app
- Keep your own records of deliveries, base pay and tips shown in the app, and save screenshots of pay offers.
- Compare the pay you were offered with what arrives in your account, and query differences promptly.
- Read notices about pay changes carefully; the settlement shows such changes should be clearly explained.
- Report suspected deception to the FTC at ReportFraud.ftc.gov.
If you tip through an app
- Check the app's tipping policy and look for a clear statement that tips go to the worker in full.
- When in doubt, ask the courier directly whether the app shows them your tip.
Watch out for refund scams
Whenever a public refund programme makes the news, impostors follow. The FTC warns that it never asks for upfront fees or for details such as a Social Security or bank account number in order to pay a refund. If someone claiming to be from the FTC asks you for money, it is a scam.
Sources: FTC press release, 2 November 2021; FTC consumer alert on Amazon Flex refunds; Reuters; FOX 13.
COMMENTS