DC Attorney General sues Amazon over alleged scheme to steal tips from delivery drivers

D.C. Attorney general Karl Racine on Thursday announced that he would sue Amazon.com, Inc. and Amazon Logistics, Inc. over a scheme in which the company used funds received from customer tips to pay the wages of its delivery drivers.

Amazon Flex provides delivery of company products through company-paid delivery drivers. The program includes an option to tip the delivery driver with a preselected amount during checkout. While that money initially went completely to the delivery drivers, in 2016, the company began to use portions of the tips received to pay the regular wages of those delivery drivers instead of directly handing over the entire tip amount, the AG said in a press release.

Amazon has already reimbursed the drivers and settled with the Federal Trade Commission, but Racine is suing the company under the D.C. Consumer Protection Procedures Act, which bars a range of deceptive business practices under which the attorney general asserts that the Amazon scheme falls.

"Workers in the District of Columbia and throughout our country are too often taken advantage of and not paid their hard-earned wages," he said. "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. Amazon can and should do better."

Moreover, the suit alleges that employees internally warned about the potential public relations disaster should the scheme become public but that "Amazon decided that saving millions of dollars by unlawfully diverting money from consumers was worth the risk of a reputational hit and persisted with its policy of using 'tips' to subsidize what Amazon had promised to pay its drivers."

The press release outlined the crux of the District's argument, asserting that "[c]onsumers commonly understand a tip to be a monetary amount paid by a consumer to a worker, which increases worker pay by the consumer-designated amount."

In claiming that 100% of the tip would go to the Amazon Flex driver, the companies effectively misled consumers by not disclosing that the tip would subsidize their existing wages, the AG contends.