Ridesharing firm Lyft will pay a $2.1 million penalty and make changes to how it promotes potential earnings to drivers, the Federal Trade Commission reported Oct. 25.

Lyft also agreed to provide evidence when making claims about drivers’ pay and clearly notifying drivers about the terms of its “earnings guarantee” offers.

“It is illegal to lure workers with misleading claims about how much they will earn on the job,” FTC Chair Lina M. Khan said in a press release. “The FTC will keep using all its tools to hold businesses accountable when they violate the law and exploit American workers.”

Lyft in a statement said it agreed to take steps to ensure what it says about driver earnings is clear. It also noted it is a leader in developing industry standard practices when it comes to transparency around driver earnings.

“After productive discussions we have agreed to pay the FTC $2.1 million USD to resolve their concerns,” according to the statement. “We agreed to this settlement because we recognize the importance of transparency in maintaining trust in the communities we serve.”

Lyft noted it recently launched “upfront pay” in many markets, allowing drivers to see ride and earnings information before accepting a ride. In February, Lyft became the only company to guarantee drivers their share of rider payments, the company said, adding that it also launched a new earnings summary for drivers. In October, Lyft month began showing drivers an estimated hourly rate for the ride on the accept screen, the company said.

“At Lyft, we are committed to drivers for the long-term and are focused on helping them understand their potential earnings opportunities before they get behind the wheel,” the company said in the statement. “We are also committed to following the FTC’s best practices when it comes to communicating about driver earnings now and in the future.”

The FTC reported that a complaint filed against Lyft claimed the company made numerous false and misleading claims in its advertising and marketing over how much drivers could make. The incidents happened in 2021 and 2022.

It noted Lyft advertised specific hourly amounts — such as $33 per hour for drivers in Atlanta and $43 per hour in Los Angeles — but didn’t disclose the amounts did not represent the average income a driver could expect to earn, the FTC reported. Instead, the earnings were based on the top one-fifth of drivers. The amounts overinflated actual earnings for most drivers by as much as 30%.

Hourly earnings claims included tips paid by passengers, though many drivers would assume any tips they received would be in addition to the hourly pay figure, according to the FTC.

Lyft also used earnings guarantees, for example, promising drivers they would make $975 if they completed 45 rides in a weekend, the FTC said. However, the FTC said those guarantees did not clearly disclose that drivers were only paid the difference between what they actually earnings and the advertised guaranteed amount.