Case 3:17-cv-00261 Document 1 Filed 01/19/17 Page 1 of 13

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DAVID C. SHONKA
Acting General Counsel
KATHERINE WORTHMAN, DC Bar No. 488800
IOANA RUSU, DC Bar No. 1001603
Federal Trade Commission
600 Pennsylvania Avenue, NW
Mailstop CC-10232
Washington, D.C. 20580
Phone: (202) 326-2929 (Worthman)
Facsimile: (202) 326-3768
Email: [email protected] (Worthman); [email protected] (Rusu)
Colin Hector, CA Bar No. 281795
Federal Trade Commission
901 Market Street, Suite 570
San Francisco, CA 94103
Phone: (415) 848-5100
Facsimile: (415) 848-5184
Attorneys for Plaintiff
FEDERAL TRADE COMMISSION

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UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

San Francisco Division

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FEDERAL TRADE COMMISSION,

Case No. ____________
Plaintiff,

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COMPLAINT FOR PERMANENT

INJUNCTION AND OTHER
EQUITABLE RELIEF

v.
UBER TECHNOLOGIES, INC.,
a Delaware corporation,

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Defendant.

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Plaintiff, the Federal Trade Commission (Commission or FTC), for its Complaint
alleges:
1.

The FTC brings this action under Section 13(b) of the Federal Trade Commission

Act (FTC Act), 15 U.S.C. 53(b), to obtain temporary, preliminary, and permanent injunctive

COMPLAINT

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relief, rescission or reformation of contracts, restitution, the refund of monies paid, disgorgement

of ill-gotten monies, and other equitable relief for Defendants acts or practices in violation of

Section 5(a) of the FTC Act, 15 U.S.C. 45(a), in connection with its false, misleading, or

unsubstantiated claims regarding driver earnings and its Vehicle Solutions Program.

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JURISDICTION AND VENUE

2.

This Court has subject matter jurisdiction pursuant to 28 U.S.C. 1331, 1337(a),

and 1345, and 15 U.S.C. 45(a) and 53(b).

3.

Venue is proper in this district under 28 U.S.C. 1391(b)(1), (b)(2), (c)(2), and

(d), and 15 U.S.C. 53(b).

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INTRADISTRICT ASSIGNMENT
4.

Defendant markets its services throughout the United States, including throughout

12 the county of San Francisco.

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PLAINTIFF
5.

The FTC is an independent agency of the United States Government created by

15 statute. 15 U.S.C. 41-58. The FTC enforces Section 5(a) of the FTC Act, 15 U.S.C. 45(a),
16 which prohibits unfair or deceptive acts or practices in or affecting commerce.
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6.

The FTC is authorized to initiate federal district court proceedings, by its own

18 attorneys, to enjoin violations of the FTC Act and to secure such equitable relief as may be
19 appropriate in each case, including rescission or reformation of contracts, restitution, the refund
20 of monies paid, and the disgorgement of ill-gotten monies. 15 U.S.C. 53(b) and 56(a)(2)(A).
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DEFENDANT
7.

Defendant Uber Technologies Inc. (Uber or Defendant) is a Delaware

23 corporation with its principal place of business in San Francisco, California. Defendant is a
24 mobile ride-hailing business and transacts or has transacted business in this district and
25 throughout the United States.
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COMPLAINT

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COMMERCE
8.

At all times material to this Complaint, Defendant has maintained a substantial

course of trade in or affecting commerce, as commerce is defined in Section 4 of the FTC Act,

15 U.S.C. 44.

UBERS BUSINESS ACTIVITIES

Overview

9.

Uber distributes a mobile software application (the App) that connects

entrepreneurial consumers who are transportation providers (hereinafter Uber Drivers or

Drivers) with consumers seeking those services (hereinafter passengers or customers).

10 Uber recruits and approves consumers to become Uber Drivers, sets the rates that Drivers charge
11 for providing transportation, and collects a portion of the fares that Drivers charge for each ride.
12 To maximize its revenue, Uber must amass a sufficient supply of Drivers to meet passengers
13 transportation demands.
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10.

Since at least May 2014, to recruit consumers to drive for Uber, Uber has

15 disseminated or caused to be disseminated advertisements encouraging consumers to become

16 Uber Drivers on various websites, including but not limited to Craigslist.com and Ubers own
17 website. In its advertisements, Uber claims that Uber Drivers can earn specific high hourly and
18 yearly earnings. Notwithstanding these representations, in many instances Drivers have not
19 earned the high earnings touted by Uber.
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11.

Since at least November 2013, to further recruit Drivers, the company has offered

21 an auto program, known as Ubers Vehicle Solutions Program, which connects prospective
22 Drivers with auto companies to buy or lease a vehicle they can use to drive for Uber. Uber has
23 made numerous claims touting the low cost and unlimited mileage of its auto program, even
24 though Uber has had no basis with which to make these claims. Indeed, the company has had no
25 oversight of, nor has the company monitored, the terms and conditions of its Drivers auto
26 agreements through the Vehicle Solutions Program. Further, Drivers in Ubers Vehicle
27 Solutions Program which has connected Drivers with subprime auto companies and dealers
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COMPLAINT

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have in many instances received worse than industry average rates, made payments for hundreds

of dollars more per month than advertised, and entered into leases imposing costs for mileage.

12.

Ubers earnings and auto claims have enticed numerous consumers to become

Uber Drivers and purchase or lease vehicles through Ubers Vehicle Solutions Program. Based

on Ubers representations, consumers have paid at least $1,000 to enter into leases or retail

installment contracts for new or used vehicles at higher costs and worse terms than those

advertised. When Ubers promised earnings have not materialized, and Drivers have attempted

to cancel their auto agreements, they have incurred significant monetary harm. Uber has

collected significant revenues from its Drivers fares, including tens of millions of dollars from

10 Drivers participating in the Vehicle Solutions Program. Ubers practices have caused its Drivers
11 to suffer millions of dollars of injury.
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How Uber Works

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Passengers book transportation services from an Uber Driver using a publicly

14 available version of the Uber App that can be downloaded to a smartphone. When a passenger
15 submits a transportation request through the Uber App, the request is transmitted to the nearest
16 available Driver signed into the App. Once a Driver has accepted a request, the App alerts the
17 customer of the Drivers name and vehicle information and facilitates passenger pick-up.
18 Following completion of the trip, Uber bills the cost of the trip to the customer. Uber later remits
19 a portion of the amount it collects to the Driver, after deducting any fees that Uber collects.
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Uber offers multiple transportation service options to its customers, including a

21 relatively lower cost option called uberX as well as higher cost options such as UberSelect,
22 UberBlack, and UberSUV. The majority of Uber Drivers provide their own vehicles.
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For each service option available, Uber has set minimum standards that its

24 Drivers vehicles must meet in order to qualify for use with Uber. These standards vary per
25 service option and city. For example, an uberX Driver in New York City must have a vehicle
26 that is model year 2010 or later and seats at least four passengers comfortably, while an
27 UberBlack Driver must have a 2010 or later luxury vehicle that seats at least six passengers
28 comfortably. In San Francisco, an uberX vehicle must be model year 2001 or later and also must
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seat four passengers comfortably, while an UberBlack vehicle must be model year 2010 or later

and a luxury sedan that seats six people comfortably.

16.

Uber has classified its Drivers as independent contractors, not employees.

Drivers have paid all expenses associated with operating a car service, including using their own

cars and paying for all gas and tolls.

17.

Uber has set the Drivers fares for each service option in each city based on

Ubers own formula, calculated using either a per-mile rate or a per-minute rate on top of a base

fare. Uber charges a service fee for each trip, which Uber has calculated as a percentage of the

Drivers total fare for the trip, usually 20%. Prior to calculating its service fee, Uber also has

10 charged each Driver a one dollar safe-rides fee to cover the cost of screening Drivers and cars
11 for safety. Uber has deducted these fees from the amount remitted to the Driver each week.
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Defendants Earnings Claims

18.

To induce individuals to become Uber Drivers, Uber has advertised and marketed

14 the earning potential of its Drivers on Craigslist, its company website, and other advertising and
15 marketing media. Uber has publicized high annual and hourly earnings to entice consumers to
16 become Uber Drivers. However, once Drivers have begun to receive their paychecks, Drivers
17 have discovered their actual earnings were substantially less than Uber has claimed.
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For example, from at least May 2014 until August 2015, Uber published a

19 statement from the CEO on its website titled, An Uber Impact: 20,000 Jobs Created On The
20 Uber Platform Every Month. In this post, Uber claimed that its uberX Drivers median income
21 is more than $90,000/year/driver in New York and more than $74,000/year/driver in San
22 Francisco. Multiple news sources disseminated this statement, including Businessinsider.com,
23 CNBC.com, Forbes.com, and Slate.com. In August 2015, Uber revised the CEOs entry on its
24 website so that the post reads: [T]he potential income a driver on uberX can make in a year is
25 more than $90,000 in New York and more than $74,000 in San Francisco.
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Notwithstanding these representations, for at least the year preceding the CEOs

27 statement (May 2013-May 2014), the median uberX Driver in New York City earned $29,000
28 less annually than Uber claimed and the median uberX Driver in San Francisco earned $21,000
COMPLAINT

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less annually than Uber claimed in its website post when Drivers hours are standardized to a 40-

hour work week. Moreover, less than 10 percent of all Drivers in New York and San Francisco

have earned the stated income.

21.

Uber has inflated its hourly Drivers earnings in job listings as well. For example,

from at least January 2015 through March 2015, Uber represented in Craigslist advertisements

that its Drivers make high hourly rates in cities across the country even when working flexible

and part-time hours. Specifically, Uber placed the following advertisements for Driver positions

in various markets:

a. Make $16/hour in Atlanta, GA;

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b. Make $16/hour in Baltimore, MD;

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c. Make $25/hour in Boston, MA;

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d. Make $21/hour in Chicago, IL;

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e. Make $15/hour in Dallas, TX;

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f. Make $20/hour in Denver, CO;

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g. Make $17/hour in Houston, TX;

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h. Make $20/hour in Los Angeles, CA;

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i. Make $16/hour in Miami, FL;

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j. Make $18/hour in Minneapolis, MN;

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k. Make $21/hour in New Jersey;

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l. Make $20/hour in Orange County, CA;

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m. Make $25/hour in Philadelphia, PA;

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n. Make $20/hour in Phoenix, AZ;

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o. Make $20/hour in San Diego, CA;

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p. Make $29/hour in San Francisco, CA; and

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q.

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Make $21/hour in Washington, DC.

As with its website post, Ubers representations in these Craigslist advertisements

27 overstate Drivers earnings as higher than the median hourly earnings in these markets. For
28 example, Ubers data on hourly earnings indicates that, in Boston, Minneapolis, and,
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Philadelphia, for the four weeks preceding January 5, 2015, for all Drivers in each of those cities,

fewer than 10% of Drivers averaged Ubers promised hourly rate. In 14 additional cities, for all

Drivers in each of those cities, fewer than 30% of Drivers averaged Ubers promised hourly rate:

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Craigslist Advertisement
Quoted Hourly Fare

City

Percent of Drivers
Averaging Quoted
Hourly Fare

Atlanta

$16

Fewer than 30%

Baltimore

$16

Fewer than 20%

Boston

$25

Fewer than 10%

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Chicago

$21

Fewer than 20%

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Dallas

$15

Fewer than 30%

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Denver

$20

Fewer than 20%

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Houston

$17

Fewer than 30%

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Los Angeles

$20

Fewer than 20%

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Miami

$16

Fewer than 50%

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Minneapolis

$18

Fewer than 10%

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New Jersey

$21

Fewer than 30%

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Orange County

$20

Fewer than 20%

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Philadelphia

$25

Fewer than 10%

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Phoenix

$20

Fewer than 30%

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San Diego

$20

Fewer than 20%

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San Francisco

$29

Fewer than 20%

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Seattle

$20

Fewer than 30%

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Washington, D.C.

$21

Fewer than 20%

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During and after the time period Uber has made these unsubstantiated earnings

27 claims, in many markets, most Drivers have not made the claimed amount. In many instances,
28 Drivers have not made the promised amounts even when factoring in non-hourly earnings, such
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as payments for time-limited promotions and other incentives. These promotions and incentives

often have been contingent on working specific late-night hours, accepting a minimum

percentage of trip requests, completing a set number of trip requests within a limited time period,

driving in a certain geographic area, or fulfilling other requirements.

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Defendants Vehicle Solutions Program

24.

Since at least November 2013, Uber has induced consumers to become Uber

Drivers by touting its Vehicle Solutions Program through its marketing materials. Uber has

directed prospective and current Drivers interested in the program to specific auto companies,

and often to specific employees at auto dealerships. Uber has entered into contracts with three

10 subprime auto companies to offer auto deals to Uber Drivers as part of the program. Auto
11 payments are deducted automatically from Drivers total weekly fares, before any earnings are
12 remitted to the Uber Driver.
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From November 2013 to April 2015, over 5,000 Drivers entered into deals with

14 one of the three auto companies through Ubers program, with nearly all Drivers entering into
15 that companys four-year lease-to-own financing option available only to Uber Drivers. To
16 participate in this program, Drivers are required to pay at least $1,000 for a down payment and
17 $1,000 for security deposit, which many Drivers have elected to distribute over the lease term.
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The two other auto companies have financed vehicle sales for Uber Drivers

19 through Ubers Vehicle Solutions Program exclusively using retail installment contracts. One
20 company participated in the program from November 2013 to May 2015, and the other company
21 participated from November 2013 until at least April 2016. Drivers first have entered into retail
22 installment contracts to purchase vehicles with the dealerships, and the dealerships have then
23 assigned or transferred the contracts to one of these two finance companies. Since November
24 2013, one company has funded over 1,500 financing contracts, and the other company has
25 funded over 400 financing contracts for Uber Drivers.
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Defendants Auto Finance Representations

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Solutions Program.

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Uber has made a number of claims about the terms and conditions of its Vehicle

For example, Uber has disseminated or caused to be disseminated advertisements

touting the low cost of using its Vehicle Solutions Program to obtain a vehicle. For example,

Uber has stated that consumers could own a car for as little as $20/day ($140/week); or lease a

car with payments as low as $17 per day ($119/week), and starting at $119/week, with the

ability to purchase the vehicle for only $1 at the end of the lease period. Further, Uber has

claimed in marketing materials directed at prospective and current Drivers that it connects

10 drivers with any kind of credit history to the best financing options available. Uber has
11 described these financing options to include financing contracts as well as a lease-to-own
12 financing option.
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Uber also has represented in its marketing material that Drivers opting to lease

14 cars through its Vehicle Solutions Program would have unlimited miles.
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30.

Uber has not had any basis for making these claims. Uber has not collected,

16 received, or monitored any Driver-specific data regarding the terms of its Vehicle Solutions
17 Program. Indeed, when Drivers have complained to Uber about the Program, Uber repeatedly
18 has responded with the following or a substantially similar note:
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Please contact your lender to discuss your payments, accruals, or amounts owed[,] as

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Uber does not keep track of this information. The lender indicates your weekly payment

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and we assist the lender in deducting that payment.

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Despite the claims that Drivers can make low weekly payments, the median

23 weekly payment for Uber Drivers who entered into a lease from late 2013 through at least April
24 2015 has been over $200, while the median weekly payment for Uber Drivers who opted to
25 purchase their vehicles through Ubers Vehicle Solutions Program during the same time period
26 has been over $160. Further, information Uber had at the time it made the claims indicate that
27 the claims are false. Ubers communications with at least one auto company have acknowledged
28 payment terms and conditions that are inconsistent with Ubers promises to Drivers.
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32.

And Drivers in Ubers Vehicle Solutions Program which has connected Drivers

with subprime auto companies and dealers have in many instances received worse interest rates

than industry averages, contrary to Ubers promise to connect Drivers with any type of credit

history to the best financing available. Ubers marketing material to dealers has acknowledged

that the lease-to-own option was a one size fits all product with an implied APR of 19.5%,

significantly higher than even the industry average interest rates for consumers with deep

subprime credit scores. Additionally, the average rate of the other auto deals for Uber Drivers

has been higher than the industry average for consumers with similar credit scores. Numerous

Drivers who have purchased cars through Ubers Vehicle Solutions Program have received

10 interest rates on their retail installment contracts that are more than double the industry average
11 rate for consumers with similar credit scores.
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Further, despite Ubers unlimited mileage claims, the leases imposed annual

13 mileage limits of 37,500 and 40,000. Specifically, Drivers leases have provided that Drivers
14 who elect to end the leases early, due to any reason including discovering that they are not
15 earning amounts promised by Uber or termination by Uber, and who surrender the car rather than
16 purchase it outright, are obligated to pay an excess mileage charge of $.20 per mile for any
17 mileage over the set limit.
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VIOLATIONS OF THE FTC ACT

34.

Section 5(a) of the FTC Act, 15 U.S.C. 45(a), prohibits unfair or deceptive acts

20 or practices in or affecting commerce. Misrepresentations or deceptive omissions of material

21 fact constitute deceptive acts or practices prohibited by Section 5(a) of the FTC Act.
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COUNT I

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Deceptive Income Claims in Violation of Section 5 of the FTC Act

35.

In numerous instances in connection with the advertising, marketing, and

25 promotion of its Driver positions, Defendant has represented, expressly or by implication, that
26 consumers in specific cities are likely to earn substantial income, including specific annual and
27 hourly amounts, as set forth in Paragraphs 19 and 21.
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36.

In many instances, the representations set forth in Paragraph 35 are false,

misleading, or were not substantiated at the time the representations were made.
37.

Therefore, the making of the representations as set forth in Paragraph 35 of this

Complaint constitutes deceptive acts or practices in violation of Section 5(a) of the FTC Act.

COUNT II

Deceptive Auto Finance Claims in Violation of Section 5 of the FTC Act

38.

In numerous instances in connection with the advertising, marketing, and

promotion of its Driver positions, Defendant has represented, expressly or by implication, that:

a.

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weekly amount such as: Starting at $119/week, For as little as $20/day, and

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For as low as $17 per day;

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b.

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financing or leasing options available.

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consumers are likely to own or lease a vehicle for an inexpensive daily or

Defendant connects Drivers with any kind of credit history to the best

In many instances, the representations set forth in Paragraph 38 are false,

15 misleading, or were not substantiated at the time the representations were made.
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40.

Therefore, the making of the representations as set forth in Paragraph 38 of this

17 Complaint constitutes deceptive acts or practices in violation of Section 5(a) of the FTC Act.
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COUNT III

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Deceptive Unlimited Mileage Claims in Violation of Section 5 of the FTC Act

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41.

In numerous instances in connection with the advertising, marketing, and

21 promotion of its Driver positions, Defendant has represented, expressly or by implication, that
22 consumers would have Unlimited Mileage when leasing a vehicle through Defendants
23 Vehicle Solutions Program.
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42.

In many instances, the representations set forth in Paragraph 41 are false,

25 misleading, or were not substantiated at the time the representations were made.
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43.

Therefore, the making of the representations as set forth in Paragraph 41 of this

27 Complaint constitutes deceptive acts or practices in violation of Section 5(a) of the FTC Act.
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COMPLAINT

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CONSUMER INJURY
44.

Consumers have suffered and will continue to suffer substantial injury as a result

of Defendants violations of the FTC Act. In addition, Defendant has been unjustly enriched as a

result of its unlawful acts or practices. Absent injunctive relief by this Court, Defendant is likely

to continue to injure consumers, reap unjust enrichment, and harm the public interest.

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THIS COURTS POWER TO GRANT RELIEF

43.

Section 13(b) of the FTC Act, 15 U.S.C. 53(b), empowers this Court to grant

injunctive and other such relief as the Court may deem appropriate to halt and redress violations

of any provision of law enforced by the FTC. The Court, in the exercise of its equitable

10 jurisdiction, may award ancillary relief, including rescission or reformation of contracts,

11 restitution, the refund of monies paid, and the disgorgement of ill-gotten monies, to prevent and
12 remedy any violation of any provision of law enforced by the FTC.
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PRAYER FOR RELIEF

Wherefore, Plaintiff FTC, pursuant to Section 13(b) of the FTC Act, 53(b), and the

15 Courts own equitable powers, requests that the Court:

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A.

Enter such preliminary and ancillary relief as may be necessary to avert the

17 likelihood of consumer injury during the pendency of this action and to preserve the possibility
18 of effective final relief, including, but not limited to, a temporary and preliminary injunction, an
19 evidence preservation order, and expedited discovery;
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B.

Enter a permanent injunction to prevent future violations of the FTC Act by

21 Defendant;
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C.

Award such relief as the Court finds necessary to redress injury to consumers

23 resulting from Defendants violations of the FTC Act, including, but not limited to, rescission
24 and reformation of contracts, restitution, the refund of monies paid, and the disgorgement of ill25 gotten monies;
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D.

Award Plaintiff the costs of bringing this action, as well as such other and

27 additional relief as the Court may determine to be just and proper.

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COMPLAINT

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Dated: _____1/19/2017____________

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Respectfully submitted,
David C. Shonka
Acting General Counsel
/s/Katherine Worthman

Katherine Worthman

(Phone: 202-326-2929)

(E-mail: [email protected])

Ioana Rusu

(Phone: 202-326-2077)

(Email: [email protected])

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Attorneys for Plaintiff Federal Trade

Commission

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COMPLAINT

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