Uber agrees to pay $20m over claims it lied to drivers about how much they could earn

The company claimed that the average driver in New York earned over $90,000 - US authorities disagreed

The sharp rise in the number of people working without guaranteed hours or basic employment rights, such as sick pay, holiday pay and a guaranteed minimum wage, has lowered the income tax and National Insurance take (Reuters)

Uber has agreed to pay $20m to resolve charges that it duped drivers with exaggerated claims about how much they could earn and underestimated how much it would cost to finance their cars.

The US Federal Trade Commission alleged that most Uber drivers were earning far less in 18 major cities than Uber said that they could earn on its website.

In a statement published on the Thursday, the FTC said Uber claimed drivers’ annual median income was more than $90,000 (£73,355) in New York and over $74,000 in San Francisco. True earnings in those cities were $61,000 and $53,000 respectively, the FTC alleged. Less than 10 per cent of all drivers in those cities earned the yearly income Uber touted, the regulator said.

The FTC also asserted that drivers paid substantially more to rent or lease cars from Uber than the company had claimed and offered worse rates than drivers could obtain elsewhere, despite claims that it provided “the best financing offers available”.

The statement covers claims Uber made from late 2013 until 2015 while trying to recruit more drivers to expand its service and remain ahead of its main rival, Lyft.

“Many consumers sign up to drive for Uber, but they shouldn’t be taken for a ride about their earnings potential or the cost of financing a car through Uber,” said Jessica Rich, director of the FTC’s bureau of consumer protection said.

“We’ve made many improvements to the driver experience over the last year and will continue to focus on ensuring that Uber is the best option for anyone looking to earn money on their own schedule,” the San Francisco-based company said in a statement, according to the Associated Press.

It is not the first time Uber has been criticised for distorting the truth. In a landmark ruling in October, London employment tribunal judges said the company resorted to "fictions, twisted language, and even brand new terminology" in its contracts.

The tribunal ruled that Uber drivers were are employees, not self-employed contractors as the company had claimed. As such they are entitled to basic rights such as holiday pay and sick pay.

The scathing judgment said the "notion that Uber in London is a mosaic of 30,000 small businesses linked by a common 'platform' is in our minds faintly ridiculous". It adding said that Uber's arguments were "absurd"