AG Schwalb Secures $3.95 Million from Amazon to Resolve Lawsuit Over Stolen Tips Intended for Delivery Worker

Settlement Forces Amazon to Pay Additional Penalties for Deceptive, Illegal Scheme After Reimbursing Workers


Attorney General Brian L. Schwalb today announced a $3.95 million settlement with Amazon.com, Inc. and Amazon Logistics, Inc. (Amazon) to resolve a lawsuit filed by the Office of the Attorney General (OAG), which alleged that the company misled DC consumers by assuring them that 100% of tips would go to Amazon Flex delivery drivers when in fact much of the tips were diverted to reduce Amazon’s labor costs and increase profits. As a result of previous legal action, Amazon drivers have already been reimbursed for the wages they were denied. Now, under this agreement, Amazon is required to pay additional financial penalties, cover the cost of OAG’s litigation, and change its business practices to clearly disclose how tips are being used.  

"When companies mislead customers to boost their profits by stealing tips intended for their workers, they are cheating their consumers, their employees, and their competitors who play by the rules," said Attorney General Schwalb. "It’s not sufficient, after being caught, to simply give back the ill-gotten gains. Rather, there must be meaningful consequences to deter misconduct from happening in the first place. Especially when living expenses are harder and harder to afford, my office will continue to ensure that hardworking District residents receive every penny of their earnings and consumers have confidence that they are not being misled."

Amazon launched its Amazon Flex service, which offers fast delivery of Amazon products, in 2015. During the checkout process, Amazon encouraged consumers to tip their delivery drivers, offering a default tip amount and assuring consumers that 100% of tips would go to the drivers. In 2016, Amazon changed its driver payment model so that a large portion of tips did not go towards increasing drivers’ total compensation but were instead used to cover a portion of the base wages Amazon had promised to pay the drivers. Amazon hid this change and continued assuring consumers that all of the tips would go to drivers, even though the company was using tips to cover its own existing obligations to drivers.

OAG filed suit in 2022, alleging that Amazon violated the District’s consumer protection laws by falsely leading customers to believe their tips were increasing delivery worker pay by the amount they tipped. The lawsuit detailed how DC consumers paid millions of dollars in tips, believing they were rewarding delivery drivers for the service they provided, while in effect Amazon captured much of the tips to save on its own operating costs. Amazon reimbursed Amazon Flex drivers for the misappropriated tips as part of a previous restitution-only settlement with the Federal Trade Commission. OAG brought its lawsuit for injunctive relief and civil penalties under District law because it is not enough for a company to repay stolen funds—significant fines are necessary to disincentivize unlawful behavior.

Under the terms of the settlement, Amazon must:

  • Pay $3.95 million to the District. This includes $2.45 million in penalties and $1.5 million in costs.
     
  • Maintain transparent tipping practices. If Amazon uses tips for any purpose other than increasing driver compensation, the company must make clear disclosures about how tips are used on both its website and its app.

A copy of the settlement agreement is available here.

This matter was handled by Assistant Attorneys General Norman Anderson, Sarah Levine, Jessica Micciolo, Jude Nwaokobia, and Morgan Sperry, Workers’ Rights and Antifraud Section Assistant Chief Dennis Corkery, and Workers’ Rights and Antifraud Section Chief Graham Lake, investigators Kenithia Alson and Shelby Miller, and interns Kaylah Paras and Adam Strathearn.  

Resources for District Residents

To report unfair business practices, scams, or fraud, you can contact OAG by: 

Visit OAG’s website to learn more about the office’s work to protect DC consumers.

How to Report Wage and Hour Violations

Workers who believe that their rights have been violated, or that they have experienced wage theft or other wage and hour violations, can contact OAG by calling (202) 724-7730 or emailing workers@dc.gov  or trabajadores@dc.gov.