[Federal Register Volume 86, Number 26 (Wednesday, February 10, 2021)]
[Notices]
[Pages 8910-8913]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-02705]


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FEDERAL TRADE COMMISSION

[File No. 192 3123]


Amazon Flex; Analysis of Proposed Consent Order To Aid Public 
Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement; request for comment.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices. The attached Analysis of Proposed Consent Order to Aid 
Public Comment describes both the allegations in the draft complaint 
and the terms of the consent order--embodied in the consent agreement--
that would settle these allegations.

DATES: Comments must be received on or before March 12, 2021.

ADDRESSES: Interested parties may file comments online or on paper by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Please write ``Amazon Flex; 
File No. 192 3123'' on your comment, and file your comment online at 
https://www.regulations.gov by following the instructions on the web-
based form. If you prefer to file your comment on paper, mail your 
comment to the following address: Federal Trade Commission, Office of 
the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex D), 
Washington, DC 20580, or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Constitution Center, 
400 7th Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC 
20024.

FOR FURTHER INFORMATION CONTACT: Guy C. Ward (312-960-5612), Midwest 
Regional Office, John C. Kluczynski Federal Building, 230 South 
Dearborn Street, Suite 3030, Chicago, IL 60604.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing a consent order to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, has been 
placed on the public record for a period of thirty (30) days. The 
following Analysis to Aid Public Comment describes the terms of the 
consent agreement and the allegations in the complaint. An electronic 
copy of the full text of the consent agreement package can be obtained 
at https://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before March 12, 2021. 
Write ``Amazon Flex; File No. 192 3123'' on your comment. Your 
comment--including your name and your state--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the https://www.regulations.gov website.
    Due to the COVID-19 pandemic and the agency's heightened security 
screening, postal mail addressed to the Commission will be subject to 
delay. We strongly encourage you to submit your comments online through 
the https://www.regulations.gov website.
    If you prefer to file your comment on paper, write ``Amazon Flex; 
File No. 192 3123'' on your comment and on the envelope, and mail your 
comment to the following address: Federal Trade Commission, Office of 
the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex D), 
Washington, DC 20580; or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Constitution Center, 
400 7th Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC 
20024. If possible, submit your paper comment to the Commission by 
courier or overnight service.
    Because your comment will be placed on the publicly accessible 
website at https://www.regulations.gov, you are

[[Page 8911]]

solely responsible for making sure your comment does not include any 
sensitive or confidential information. In particular, your comment 
should not include sensitive personal information, such as your or 
anyone else's Social Security number; date of birth; driver's license 
number or other state identification number, or foreign country 
equivalent; passport number; financial account number; or credit or 
debit card number. You are also solely responsible for making sure your 
comment does not include sensitive health information, such as medical 
records or other individually identifiable health information. In 
addition, your comment should not include any ``trade secret or any 
commercial or financial information which . . . is privileged or 
confidential''--as provided by Section 6(f) of the FTC Act, 15 U.S.C. 
46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)--including in 
particular competitively sensitive information such as costs, sales 
statistics, inventories, formulas, patterns, devices, manufacturing 
processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular, 
the written request for confidential treatment that accompanies the 
comment must include the factual and legal basis for the request, and 
must identify the specific portions of the comment to be withheld from 
the public record. See FTC Rule 4.9(c). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted on the https://www.regulations.gov website--as legally 
required by FTC Rule 4.9(b)--we cannot redact or remove your comment 
from that website, unless you submit a confidentiality request that 
meets the requirements for such treatment under FTC Rule 4.9(c), and 
the General Counsel grants that request.
    Visit the FTC website at http://www.ftc.gov to read this Notice and 
the news release describing the proposed settlement. The FTC Act and 
other laws that the Commission administers permit the collection of 
public comments to consider and use in this proceeding, as appropriate. 
The Commission will consider all timely and responsive public comments 
that it receives on or before March 12, 2021. For information on the 
Commission's privacy policy, including routine uses permitted by the 
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``Commission'') has accepted, subject 
to final approval, an agreement containing a consent order from 
Amazon.com, Inc. and Amazon Logistics, Inc. (``Amazon''). The proposed 
consent order has been placed on the public record for 30 days for 
receipt of comments from interested persons. Comments received during 
this period will become part of the public record. After 30 days, the 
Commission will again review the agreement and the comments received, 
and will decide whether it should withdraw from the agreement and take 
appropriate action or make final the agreement's proposed order.
    Amazon operates Amazon Flex, a gig economy program through which 
consumers can become ``drivers'' for Amazon and, using their own 
vehicles, deliver products and groceries to Amazon customers. Amazon 
pays drivers for making deliveries, and for some types of deliveries, 
allows customers to tip the drivers via the app or website used to 
place the order. Amazon consistently represents to both drivers and 
customers that it passes on 100% of customer tips to drivers. However, 
from late 2016 through August 2019, Amazon withheld nearly a third of 
the tips meant for drivers, about $61 million in total, despite its 
representations that it would provide drivers 100% of customer tips. 
Amazon continued diverting drivers' tips in this way for over two and a 
half years despite hundreds of complaints from drivers and critical 
media reports. Amazon changed its practices only after the FTC issued a 
Civil Investigative Demand to the company in May 2019.
    The Commission's proposed complaint alleges that Amazon has 
violated Section 5 of the FTC Act. In particular, the proposed 
complaint alleges Amazon misrepresented to both customers and drivers 
that it would give drivers 100% of customer tips in addition to the pay 
Amazon offered.
    The proposed order includes equitable monetary relief and 
injunctive provisions to prevent Amazon from engaging in the same or 
similar acts or practices in the future. Part I of the proposed order 
prohibits Amazon from misrepresenting to any consumer, including both 
customers and drivers: (a) The income a driver is likely to earn, (b) 
the amount Amazon will pay drivers, (c) that Amazon will give drivers 
customer tips in addition to Amazon's contribution to drivers' 
earnings, (d) the percentage or amount of any customer tip a driver 
will receive, or (e) that any amount customers pay is a tip. Part II of 
the proposed order prohibits Amazon from changing the extent to which 
it uses a driver's tips toward Amazon's contribution to the driver's 
earnings without first obtaining express informed consent from the 
driver.
    Part III of the proposed order requires Amazon to pay $61,710,583--
the full amount of tips that Amazon improperly withheld from drivers. 
Part IV of the proposed order requires Amazon to provide sufficient 
information about drivers to enable the Commission to administer 
redress efficiently to drivers.
    Parts V through VIII of the proposed order are reporting and 
compliance provisions. Part V requires acknowledgments of the order. 
Part VI requires Amazon to notify the Commission of changes in 
corporate status for 10 years and mandates that the company submit an 
initial compliance report to the Commission. Part VII requires Amazon 
to create certain documents relating to its compliance with the order 
for 10 years and to retain those documents for a 5-year period. Part 
VIII mandates that the company make available to the Commission 
information or subsequent compliance reports, as requested.
    Finally, Part IX states that the proposed order will remain in 
effect for 20 years, with certain exceptions.
    The purpose of this analysis is to aid public comment on the 
proposed order. It is not intended to constitute an official 
interpretation of the complaint or proposed order, or to modify in any 
way the proposed order's terms.

    By direction of the Commission.
April J. Tabor,
Secretary.

Joint Statement of Acting Chairwoman Rebecca Kelly Slaughter and 
Commissioner Noah Joshua Phillips

    The internet-enabled gig economy is substantial and continues to 
grow. According to one study, U.S. families earning income from the 
internet-enabled gig economy rose from under 2% of the sample in 2013 
to 4.5% by early 2018, with more than 5 million U.S. households earning 
some income from this type of work by 2018.\1\

[[Page 8912]]

Another study estimates worldwide transaction volume of $204 billion in 
2018, which will more than double to $455 billion by 2023.\2\
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    \1\ See Diana Farrell, Fiona Greig & Amar Hamoudi, The Online 
Platform Economy in 2018: Drivers, Workers, Sellers and Lessors, 
JPMorgan Chase & Co. Institute (2018) at 23, https://www.jpmorganchase.com/content/dam/jpmc/jpmorgan-chase-and-co/institute/pdf/institute-ope-2018.pdf. Particularly because of high 
turnover, with many workers spending only a few months 
participating, estimates of the gig economy are difficult and 
inconsistent. Another study estimated that there were 1.6 million 
American workers in the internet-enabled gig economy in 2017, or 1% 
of the entire workforce, still a substantial number. See U.S. Bureau 
of Labor Statistics, Electronically mediated work: new questions in 
the Contingent Worker Supplement, U.S. Dep't of Labor (Sept. 2018), 
https://www.bls.gov/opub/mlr/2018/article/electronically-mediated-work-new-questions-in-the-contingent-worker-supplement.htm.
    \2\ See Mastercard & Kaiser Associates, The Global Gig Economy: 
Capitalizing on a ~$500 Billion Opportunity (May 2019) at 2, https://newsroom.mastercard.com/wp-content/uploads/2019/05/Gig-Economy-White-Paper-May-2019.pdf. Another study estimated that spending on 
gig platforms was increasing 43% year-on-year in 2018. See Uber, 
Working Together: Priorities to enhance the quality and security of 
independent work in the United States (Aug. 10, 2020) at 5, https://ubernewsroomapi.10upcdn.com/wp-content/uploads/2020/08/Working-Together-Priorities.pdf (``Uber Report'') (citing Staffing Industry 
Analysts, The Gig Economy and Human Cloud Landscape (2019)). By way 
of example, the number of Uber drivers in the U.S. has grown from 
160,000 in 2014 to 1 million in 2020. See Jonathan V. Hall & Alan B. 
Krueger, An Analysis of the Labor Market for Uber's Driver-Partners 
in the United States at 1 (Princeton U. Indus. Relations Section, 
Working Paper No. 587, Jan. 2015), https://dataspace.princeton.edu/bitstream/88435/dsp010z708z67d/5/587.pdf; Uber Report.
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    Consumer demand for the services offered by the gig economy surely 
contributes to this growth. But it would not be possible without the 
contributions of drivers, shoppers, designers, and other gig workers, 
whether seeking supplemental income or relying on one gig or a 
patchwork of gigs to get by.
    The impact of the internet-enabled gig economy on workers is a 
matter of robust debate in Congress, state legislatures, popular 
referenda, academia, and elsewhere. The two authors of this joint 
statement may not agree on every aspect of this debate, including 
whether this novel business model is, on net, beneficial for consumers 
and workers.
    Where we do agree--and what this case reflects--is the platforms 
that facilitate this gig economy must treat their workers fairly and 
non-deceptively, just as they must consumers, and the Federal Trade 
Commission should work to ensure they do. That is why this case 
resolving our investigation into Amazon.com, Inc.'s and its subsidiary 
Amazon Logistics, Inc.'s (collectively, ``Amazon'') treatment of 
delivery drivers is so important.
    The conduct alleged in the complaint is outrageous. According to 
the complaint, Amazon recruited delivery drivers (and, possibly, 
attracted customers) by promising that drivers would collect all the 
tips awarded them by Amazon customers. At a certain point, it decided 
to divert thirty percent of those tips from drivers to the company to 
subsidize the amounts it had committed to paying its drivers. The 
complaint alleges Amazon then went to great lengths to ensure no one 
would figure out what it was doing, by changing the way it presented 
earnings to drivers and drafting misleading answers for service 
representatives to give to drivers upset at being short-changed.
    Our settlement with Amazon ensures these drivers will get back 
every dollar that was promised, every dollar that a customer chose to 
give as a tip for their service. That is a good result for an 
enforcement action under the FTC Act, the law we apply today. But we 
believe, given the importance of candor and fairness to workers in the 
gig economy, our current authorities could be improved. Congress can 
give us direct penalty authority to deter deception aimed at workers in 
the internet-enabled gig economy and rulemaking authority under the 
Administrative Procedure Act to address systemic and unfair practices 
that harm those workers.
    Clear rules and the threat of substantial civil penalties can deter 
wrongdoing. The authors of this statement do not always agree on the 
proper scope of rulemaking and penalty authority, but we do agree here. 
Authorizing the FTC to assess penalties to deter similar lawbreaking 
will help gig workers and make labor markets more efficient. The 
internet-enabled gig economy is new, innovative, and growing. We 
believe the modest reforms we propose here can help gig workers have a 
fairer shake at getting their benefit of the bargain from that growth, 
too.

Statement of Commissioner Rohit Chopra

    Today, the FTC is sanctioning Amazon.com (NASDAQ: AMZN) for 
expanding its business empire by cheating its workers. In 2015, Amazon 
launched Flex, a package delivery service that was widely seen as a 
challenge to FedEx and UPS.\3\ To recruit drivers, the company promised 
to pay them a minimum of $18 to $25 an hour, plus tips.\4\ But once the 
service was off the ground, in late 2016, Amazon changed course. The 
Commission's complaint charges that the company secretly began cutting 
its payments to drivers, and siphoning their tips to make up the 
difference.\5\ In total, Amazon stole nearly one-third of drivers' tips 
to pad its own bottom line.
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    \3\ See Laura Stevens, Amazon Drives Deeper Into Package 
Delivery, Wall Street J. (June 28, 2018), https://www.wsj.com/articles/amazon-drives-deeper-into-package-delivery-1530158460.
    \4\ Compl., In the Matter of Amazon, Inc., Fed. Trade Comm'n 
File 1923123, ]] 17-20.
    \5\ Id. ]] 30-34.
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    This theft did not go unnoticed by Amazon's drivers, many of whom 
expressed anger and confusion to the company. Rather than coming clean, 
Amazon took elaborate steps to mislead its drivers and conceal its 
theft, sending them canned responses that repeated the company's lies. 
The complaint charges that Amazon executives chose not to alter the 
practice, instead viewing drivers' complaints as a ``PR risk,'' which 
they sought to contain through deception.\6\
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    \6\ Id. ] 35-47.
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    Amazon's scheme ended after it was exposed, but it likely produced 
significant benefits for the company. First, by promising a higher base 
pay initially, Amazon was likely able to recruit drivers more quickly, 
particularly as the company tried to stand up Amazon Flex in time for 
the holiday season.\7\ Second, and most directly, Amazon's bait-and-
switch allowed the company to pocket more than $60 million in workers' 
tips.\8\ And finally, by allegedly misleading its workers about their 
earnings, the company made it less likely drivers would seek better 
opportunities elsewhere, helping Amazon attract and retain workers in 
its quest to dominate.\9\
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    \7\ Shortly after launching Flex, Amazon noted that it was 
trying to ``ramp quickly'' in anticipation of the holiday season, 
Prime Day, and other periods of high demand. See Becky Yerak, Uber 
for packages? Amazon looking for drivers to deliver goods, Chicago 
Tribune (Oct. 9, 2015), https://www.chicagotribune.com/business/ct-amazon-flex-chicago-1009-biz-20151009-story.html.
    \8\ Compl., supra note 2, ] 8.
    \9\ During the period of the alleged lawbreaking, gig workers 
were reportedly in high demand. See Christopher Mims, In a Tight 
Labor Market, Gig Workers Get Harder to Please, Wall Street J. (May 
4, 2019), https://www.wsj.com/articles/in-a-tight-labor-market-gig-workers-get-harder-to-please-11556942404.
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    By the time this scheme was exposed in late 2019, Amazon Flex was 
far more established. In fact, that same year, the company quietly 
disclosed that it was slashing drivers' minimum pay by more than 15 
percent, relative to what it promised in 2015.\10\ This conduct raises 
serious questions about how Amazon amassed and wielded its market 
power. Fortunately, today's action to redress the company's victims 
does not prevent

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the FTC or state attorneys general from assessing whether Amazon has 
engaged in a broader pattern of unfair practices in violation of the 
antitrust laws.
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    \10\ After Amazon's scheme was exposed, the company indicated 
that it would begin paying drivers a minimum of $15 per hour. See 
Chaim Gartenberg, Amazon will no longer use tips to pay delivery 
drivers' base salaries, The Verge (Aug. 22, 2019), https://www.theverge.com/2019/8/22/20828550/amazon-delivery-drivers-tips-end-base-salaries-flex. This was a significant reduction from the 
$18 promised in 2015, particularly when adjusted for cost of living.
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    Today's order provides substantial redress to the families 
victimized by Amazon's anticompetitive deception. However, this cannot 
be the only action we take to protect workers and families from 
dominant middlemen. The FTC will also need to carefully examine whether 
tech platforms are engaging in anticompetitive conduct that hoodwinks 
workers and crushes law-abiding competitors.\11\
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    \11\ I have previously outlined certain steps that regulators 
can take to address anticompetitive practices in labor markets. 
Comment Submission of Commissioner Chopra to Department of Justice 
Initiative on Labor Market Competition (Sept. 18, 2019), https://www.ftc.gov/public-statements/2019/09/comment-submission-commissioner-chopra-department-justice-initiative-labor.
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    The Commission has historically taken a lax approach to worker 
abuse, entering no-consequences settlements even in naked wage-fixing 
matters that are criminal in nature.\12\ Despite broad pronouncements 
about a commitment to policing markets for anticompetitive conduct that 
harms workers,\13\ the FTC has done little. I hope today's action turns 
the page on this era of inaction.
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    \12\ In 2019, the FTC agreed to a no-consequences settlement 
with respondents charged with blatant wage-fixing. See Dissenting 
Statement of Commissioner Rohit Chopra In the Matter of Your Therapy 
Source, Neeraj Jindal and Sheri Yarbray, Fed. Trade Comm'n File No. 
1710134 (Oct. 31, 2109), https://www.ftc.gov/public-statements/2019/10/dissenting-statement-commissioner-rohit-chopra-matter-your-therapy-source. Respondent Neeraj Jindal was later indicted by the 
United States Department of Justice. Press Release, U.S. Dep't of 
Justice, Former Owner of Health Care Staffing Company Indicted for 
Wage Fixing (Dec. 10, 2020), https://www.justice.gov/opa/pr/former-owner-health-care-staffing-company-indicted-wage-fixing.
    \13\ See, e.g., Press Release, Fed. Trade Comm'n, FTC and DOJ 
Release Guidance for Human Resource Professionals on How Antitrust 
Law Applies to Employee Hiring and Compensation (Oct. 20, 2016), 
https://www.ftc.gov/news-events/press-releases/2016/10/ftc-doj-release-guidance-human-resource-professionals-how.
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    I also agree with Acting Chairwoman Slaughter and Commissioner 
Phillips that preying on workers justifies punitive measures far beyond 
the restitution provided here, and I believe the FTC should act now to 
deploy dormant authorities to trigger civil penalties and other relief 
in cases like this one.\14\
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    \14\ Under its status quo approach, the FTC does not seek civil 
penalties for this type of abuse. But this can change. In the short 
term, the Commission can deploy its Penalty Offense Authority to 
apprise market participants, using existing administrative orders, 
that it is a penalty offense to recruit workers based on false 
earnings claims. See Rohit Chopra & Samuel A.A. Levine, The Case for 
Resurrecting the FTC Act's Penalty Offense Authority (Oct. 29, 
2020), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3721256. 
The Commission can also codify existing precedent into a Restatement 
Rulemaking to trigger penalties and damages for this type of fraud. 
See Statement of Commissioner Rohit Chopra Regarding the Report to 
Congress on Protecting Older Consumers, Fed. Trade Comm'n File No. 
P144400 (Oct. 19, 2020) https://www.ftc.gov/public-statements/2020/10/statement-commissioner-rohit-chopra-regarding-report-congress-protecting. Such a rule would impose no burden on market 
participants, while ensuring real deterrence for practices that 
undercut workers and competitors.
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    Companies should succeed only when they compete, not when they 
cheat or abuse their power. While Amazon.com is one of the largest, 
most powerful, and most feared firms in the world, the company cannot 
be above the law. Regulators and enforcers in the United States and 
around the globe can no longer turn a blind eye.

[FR Doc. 2021-02705 Filed 2-9-21; 8:45 am]
BILLING CODE 6750-01-P