The $61.7 Million Tip Scandal: 5 Shocking Facts About The Amazon Driver Lawsuit Settlement And Latest Payouts In 2025

The "stolen tips" scandal that rocked Amazon's gig economy ecosystem remains a crucial topic for millions of delivery drivers, with new developments continuing to surface even in late 2025. The core of the controversy centers on allegations that the e-commerce giant illegally withheld gratuities intended for its Amazon Flex drivers over a period of several years, a practice that led to a massive settlement with the Federal Trade Commission (FTC).

This situation, which exposed significant pay discrepancies and questionable labor practices within the world of independent contractors, resulted in a landmark $61.7 million settlement. As of today, December 12, 2025, the FTC continues to manage the distribution of these funds, sending out additional rounds of payments to eligible drivers who had their hard-earned tips subsidized or outright withheld by the company.

The Anatomy of the Amazon Driver Tip Theft Allegations

The entire controversy revolves around the operations of the Amazon Flex program, which utilizes gig workers—referred to as independent contractors—to deliver packages for services like Prime Now, AmazonFresh, and general Amazon deliveries. The central allegation, brought forth by the Federal Trade Commission (FTC), was that Amazon misled its customers and its drivers about how tips were being handled between late 2016 and August 2019.

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Initially, Amazon promised its Flex drivers a specific hourly rate plus 100% of the customer tips. However, the FTC filed a complaint alleging that Amazon secretly changed its payment model. Instead of adding the tips on top of the base pay, Amazon allegedly began using the customer tips to subsidize the drivers' guaranteed hourly rate.

For example, if a driver's guaranteed minimum for a delivery block was $20, and a customer left a $5 tip, Amazon would reportedly pay the driver $15 of its own money and then use the customer's $5 tip to reach the $20 guarantee, effectively pocketing the tip money that was meant to be an addition to their pay. This practice amounted to a form of wage theft, with the company using customer gratuities to cover its own labor costs.

The FTC's complaint was a significant consumer protection action, arguing that Amazon's deceptive practice not only cheated the drivers but also misled the customers who believed their tips were going directly to the workers.

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Key Entities and Timeline of the FTC Settlement

• Primary Defendant: Amazon.com, Inc. (specifically the Amazon Flex program).
• Lead Plaintiff/Regulator: The Federal Trade Commission (FTC).
• Affected Drivers: Amazon Flex drivers working for Prime Now, AmazonFresh, and other Amazon delivery services.
• Tip Withholding Period: Late 2016 to August 2019.
• Settlement Date: Announced in February 2021.
• Settlement Amount: $61.7 million.
• Initial Payouts: Began in November 2021.
• Ongoing Payouts: The FTC has continued to send additional payments (refund checks) in subsequent years, including a second round of payments due to remaining funds in the settlement pool.

This landmark case set a precedent for how major technology and e-commerce companies must handle gratuities, especially concerning independent contractors and the complex structure of the modern gig economy.

The $61.7 Million FTC Settlement: Who Got Paid and How Much?

The $61.7 million settlement was designed to provide full financial relief to the thousands of Amazon Flex drivers impacted by the company's alleged tip-withholding scheme. The money was placed into a settlement fund managed by the FTC for distribution.

The process of determining eligibility and payment amounts was meticulous, focusing on the actual pay discrepancies and withheld tips for each individual driver. The FTC identified approximately 140,000 drivers who were eligible for a payment.

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The initial round of payments in November 2021 saw more than $58.5 million returned to the drivers. The amounts varied significantly based on how much was withheld from each driver during the 2016-2019 period. The highest single payment was over $28,000, while the average payment was around $420.

The Ongoing Payouts and What It Means for Drivers in 2025

A key piece of recent and current information is that the FTC has continued to send out additional payments. This happens when the initial distribution leaves remaining funds in the settlement pool, often because some checks were not cashed or some drivers could not be located. Because the fund still holds money, the FTC is sending out further refund checks to those Amazon Flex drivers who had their tips withheld.

For drivers who believe they were affected between 2016 and 2019 but did not receive a payment, the FTC maintains resources on its website to address inquiries about the ongoing payment distribution process. This continuous effort by the Federal Trade Commission to ensure all funds reach the intended recipients highlights the commitment to consumer protection and rectifying the issue of withheld tips. The case serves as a powerful reminder to all independent contractors about the importance of transparency in their pay structures.

The Separate D.C. Attorney General Lawsuit: A Double Penalty

While the FTC settlement was the largest and most comprehensive, Amazon faced further legal action over the same issue, demonstrating the severity of the tip theft allegations. In a separate action, the District of Columbia (D.C.) Attorney General filed a lawsuit against Amazon for the same practice of using customer tips to cover its own labor costs for delivery workers in D.C.

This lawsuit was filed to penalize Amazon for its actions and to ensure that the company was held accountable for violating local consumer protection laws. The D.C. Attorney General, Brian L. Schwalb (and former AG Karl Racine who filed the initial suit), successfully secured a $3.95 million settlement from Amazon to resolve the lawsuit over the stolen tips.

This second settlement, while smaller than the FTC's, is significant because it represents an additional penalty and restitution fund specifically for the delivery workers affected in the District of Columbia. The funds from this settlement are also intended to be distributed to the affected workers, further compensating them for the pay discrepancies they experienced. This dual action by both a federal agency (FTC) and a state-level Attorney General underscores the broad legal and regulatory pushback against the practice of subsidizing wages with gratuities.

The Broader Impact on Gig Worker Compensation and Tip Transparency

The Amazon driver tips lawsuit settlement has had a ripple effect across the entire gig economy. It highlighted the vulnerability of independent contractors and the need for greater transparency in how companies like Amazon, Uber, and DoorDash handle customer gratuities. The case is frequently cited in discussions about wage theft and the classification of gig workers, pushing for stronger protections against similar practices in the future.

The outcome has solidified several key principles:

• Tips Are Additive: Gratuities left by customers must be paid in addition to a worker's guaranteed base pay, not used to fulfill the guarantee.
• Transparency is Mandatory: Companies must clearly and accurately represent their payment model to both the customer and the worker.
• Regulatory Oversight: The involvement of the FTC and state Attorneys General proves that regulatory bodies are actively monitoring and willing to take aggressive action against deceptive labor practices, especially those involving withheld tips.

For current and future Amazon Flex drivers, the settlement is a hard-won victory that serves as a powerful deterrent against future tip-related misconduct by the e-commerce giant and other platforms. It has forced a necessary conversation about ethical compensation and the true cost of labor for delivery service partners (DSPs).