Amazon Reaches $4M Settlement Over Allegations of Withholding Flex Driver Tips

Amazon has agreed to a $4 million settlement following allegations that it misappropriated customer tips meant for its Flex drivers. The lawsuit, filed by Washington, D.C., Attorney General Brian L. Schwalb, claimed that between 2016 and 2019, Amazon used tip money to offset driver base pay, despite originally stating tips were in addition to wages. This practice allegedly resulted in drivers losing over $1 million in earnings.

The Federal Trade Commission (FTC) had already investigated Amazon for the same issue, leading to a previous settlement in 2021 that required the company to return the withheld tips. However, the attorney general pursued further action to impose civil penalties and ensure future compliance. The recent settlement includes $2.45 million in penalties and $1.5 million in costs.

While Amazon denies any wrongdoing, it has agreed to maintain its current tipping policy and to provide clear disclosures if changes occur in the future. This case underscores the legal risks companies face when modifying payment structures without full transparency to workers and consumers.