Ride-hailing giant Lyft has agreed to a $2.1 million settlement with the Federal Trade Commission (FTC) over deceptive earnings claims made to drivers. The FTC alleged that Lyft systematically inflated income projections to recruit drivers, exaggerating hourly rates by up to 30% in some cases. The company also failed to disclose that advertised rates included customer tips and made misleading promises about promotions and incentives.

The settlement comes after the FTC warned Lyft in 2021 to cease its practices, but the company continued to mislead drivers. The agency received thousands of complaints from drivers, many of whom are non-native English speakers.

As part of the settlement, Lyft must change its payment promises, excluding tips from hourly rate estimates and clearly explaining promotions. While the fine is a small fraction of Lyft's revenue, the company's actions have significant implications for the gig economy and startup ethics.

Two FTC commissioners dissented from the decision, arguing that the agency overstepped in pursuing the "earn up to" language as misleading. However, the settlement serves as a warning to startups to prioritize transparency and honesty in their marketing and recruitment practices.