Uber has agreed to pay $20 million to settle allegations that it "misled" drivers with false promises on how much they would earn and pay to finance a car.
The lawsuit was brought by the US Federal Trade Commission (FTC) which cited 18 American cities where Uber was promoting a more than realistic picture for drivers.
Uber maintains that it hasn't done anything wrong.
FTC criticizes Uber over financing options for drivers
The FTC regulator said drivers who leased cars from Uber were paying an average of $200 every week. This is higher than previously advertised. The money was automatically deducted from a driver's earnings.
How did it happen
How the drivers were "misled"
In a statement present on Uber's website from May 2015 to August 2015, CEO Travis Kalanick boasted that New York and San Francisco drivers could earn over $90,000 and $ $74,000.
The FTC found that median range income of drivers was around 30% less, at $61,000 in New York and $53,000 in San Francisco.
A similar pattern was visible in other cities.
US regulator slams Uber
"Companies like Uber shift cost, risk, and burden onto drivers and taxpayers when they fail to provide the basic benefits … from health insurance to sick leave," the FTC said, adding "drivers are stuck with the bill for their vehicle, gas, repairs, maintenance, insurance" etc.
Uber says settlement doesn't mean it is guilty
"We're pleased to have reached an agreement with the FTC," Uber said.
The company said the settlement doesn't constitute an admission of guilt and disputed the FTC's methodology to calculate its figures.
Uber said it has improved the way it advertises possible earnings to recruit new drivers.
However, drivers complained that these improvements don't take into account a car's running and maintenance's cost.