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March 2, 2022 17 mins

In the penultimate Megacorp episode we look into how Amazon got fined $60million for stealing money from the tips of their freelance delivery drivers.

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Episode Transcript

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Speaker 1 (00:01):
I want to thank every Amazon employee and every Amazon
customer because you guys paid progress. You guys paid problems.
This is megaical an investigative podcast exposing some of the
world's most unethical corporations. This series is about Amazon. I'm

(00:22):
Jake Hanrahan, journalists and documentary filmmaker. Mega Corp is produced
by H eleven for cool Zone Media. Picture this. You're
a freelance Amazon delivery driver what's known as an Amazon

(00:45):
Flex driver. You deliver packages, You do your best, you
make your realms. It can be a fairly low paying job,
but if you get decent tips from the customers you
deliver to, you'll be able to make do. Probably you're
not going to get rich doing this, but every little helps.
Secretly though, imagine this in the background. The company you

(01:07):
work for, Amazon, which is owned by the world's richest man,
is literally stealing money from your tips that weren't enough
to make you furious. I don't know what is Believe
it or not, though this is not a hypothetical situation.
This is exactly what happened at Amazon. For two and

(01:28):
a half years. Amazon was effectively stealing money from the
tips of Amazon Flex drivers when they got caught. Amazon
was fined sixty one point seven million dollars by America's
Federal Trade Commission or the FTC in one somehow, though,

(01:50):
get this, they got richer of the back of that.
Now you're probably thinking, how the fuck. Well, let's get
into it. So the fine I just mentioned is actually
roughly the amount Amazon stole from its Flex drivers. According
to journalists Will a remus of one zero. That's sixty

(02:12):
one point seven million dollars roughly taken from drivers. What's more,
in the hours after the FTC fine announcements came out,
Amazon's stock prices rose by one to two percent. Yeah,
that's right, they rose. This added around twenty billion dollars
to the company's market value, As Will Arima says in

(02:36):
his one zero article, Corporate crime Pays. So anyway, how
did this scam work? Well, basically, Amazon Flex drivers work
for a guaranteed minimum hourly rate. Anything they make on
top via tips was supposed to be there's extra money.

(02:57):
Amazon told them that they would be able to one
of the tips. Likewise, with the customers, they were told
if they tipped their driver, all of it would go
to the driver. What happened, though, is that Amazon was
effectively building a pyramid scheme, using the money from tips
to pay the minimum hourly rate of the drivers at times,

(03:21):
and then secretly deducting the tips before they got them.
This is completely criminal. If you or me did something
like this, we'd probably go to prison. But Amazon seems
to be above the law. Journalist Joanna Brien first broke
this story for The l A. Times. She wrote, quote
Amazon at times deeps into the tips earned by contracted

(03:44):
delivery drivers to cover their promised to pay. A Times
review of emails and receipts reveals Amazon guarantees third party
drivers for its Flex program a minimum of eighteen dollars
to twenty five dollars per hour, but the entirety of
that payment doesn't always come from the company. If Amazon's
contribution doesn't reach the guaranteed wage, the e commerce giant

(04:09):
makes up the difference with the tips from customers. According
to documentation shared by five drivers. In emails to drivers,
Amazon acknowledges it can use any supplemental earnings to meet
the promised minimum should the company's own contribution for short.
Amazon insists that the drivers received the entirety of their tips,

(04:32):
but they declined to answer questions about whether it uses
those tips to help the drivers a base pay end quote.
An Amazon spokesperson named Amanda I wrote the following in
a statement, quote, our pay commitment to delivery drivers has
not changed since we launched the Amazon Flex program. Delivery

(04:54):
partners still earn eighteen dollars per hour, including one of tips,
and on average, drivers earn over twenty dollars per hour
end quote. Well, as we know, it seems like the
FTC disagrees with that. Now. Amazon conveniently doesn't actually provide

(05:15):
drivers with a breakdown of their tips and pay beyond
showing them their full payout. So the way some cunning
Amazon Flex drivers called Amazon out was by checking the
tips paid to them when delivering packages to their own houses.
One driver, for example, tipped himself fifteen dollars and ninety
cents when delivering a package of paper towels to his

(05:37):
own home. When he checked his account two days later,
he saw that he was credited as receiving no tips
for the whole two hours shift that day, the one
where he tipped himself. When he put in a formal
complaint to Amazon about this, they adjusted his pay without
any explanation. Seemingly adding extra tips on top two. Now,

(06:00):
believe it or not, some of this is actually legal
in some places in America, reported by the l a
Times article quote, the practice is legal in some states.
The California Labor Codes Provision three five one, which targets
the practice, does not apply to contractors because they are
seen as independent business owners. In Seattle, a group of

(06:23):
drivers has contested the classification in appending class action lawsuit,
claiming they are actually treated as employees. Amazon would not
say whether it dips into drivers tips in California. End quote. Now,
eventually Amazon was found out and this huge fire was
given to them. As we know, Amazon said they didn't

(06:47):
really accept what was levied at them, but they paid
the fire anyway. Here's what the FTC had to say
about it in a press release from one quote. According
to the FTC, these administrative complaints against Amazon and its subsidiary,
Amazon Logistics. The company regularly advertised that drivers participating in

(07:09):
the Flex program would be paid eighteen to twenty five
dollars per hour for their work making deliveries to customers.
The ads, along with the numerous other documents provided to
Flex drivers, also prominently featured statements such as you will
receive one percent of the tips you earn while delivering
with Amazon Flex. Rather than passing along one percent of

(07:32):
customers tips to drivers as it had promised to do,
Amazon used the money itself. Our action today returns to
drivers the tens of millions of dollars in tips that
Amazon misappropriated, and requires Amazon to get drivers permission before
changing its treatment of tips in the future. Pend quote.

(08:01):
To get an idea of what it's like working as
an Amazon Flex driver, I spoke to someone that is
currently still working for them. We'll call him Bob. Bob
believes that he had tips stolen from him in the past,
and he has several other grievances with Amazon's Flex driver program.
Let's see what he had to say. They have not

(08:21):
exactly been fair. They've not been treating you guys right.
The biggest issue is Amazon will dispatch stuff late or
they'll they'll be whether delays or a myriad of issues.
And when it comes right down to it, every time
something is late, they automatically blame the drivers for it
and then punish the drivers for it. There's no middleman.

(08:43):
You can try and appeal it, but the only time
I've ever been successfully appealed anything is to go to
their escalations department because all of their support is offshore
now and people don't understand or they just don't care.
I mean, I'll get emails like, oh, well, we're not
going to investigate this issue. It's like, I understand that
I'm a contracted person and I'm not an Amazon employee,

(09:06):
but where is the fairness in this? So, for example,
yesterday they took a whole Food's order and I had
taken three previous orders and gone back to the location,
and they gave me an order that was literally sitting
on the shelf when I said of the first time.
And now it's late, and now I'm being blamed for
the late delivery, even though they could have dispatched it

(09:27):
to me when I was there the first time. But
they're holding me accountable for the late delivery. And and
the same holds true for if packages go missing, it's
the driver's fault. If the package is damaged, it's the
driver's fault. I left packages at the location because they
were damaged, and I'm still being held accountable for him.
It's like I never even left your store, right, So
they are essentially not paying you correctly for things that

(09:48):
you haven't done correct and then they will you know,
they call it deactivating you. They will deactivate you for
late deliveries or for stuff that you can't get the
livered because people don't answer their phones, or there's no
safe place to leave it and you have to take
it back to the location. But that's your fault because
the customer was on cooperative. They call it deactivating. What

(10:12):
does that mean? They don't gonna work with you again? Okay,
So you get all of your stuff through an application.
It's called Amazon Flex, and if they decide that they
don't want you to work for them anymore, they de
activate your account and you can't get worked. They'll send
you an email that says you've been deactivated for such
such a reason, and happy trails. So, as Bob just

(10:32):
explained that if anything happens to the postle, even if
it's not the driver's fault, they will get penalized for
it and maybe even deactivated. What an Orwellian term. Anyway,
let's hear what Bob had to say about the tip
stealing scandal at Amazon Flex. Drivers. Amazon, we're taking tips
from drivers and using those tips to make the other

(10:55):
drivers wages a little better. So they weren't actually us
the tips that we were getting. They were they were
dispersing the tips elsewhere. I mean, I had only worked
for Amazon for six months at that point, and I
got a seven page or check from the FTC because
that's how much they had taken out of my tips.
I know drivers that got seventeen thousand dollar checks because

(11:18):
Amazon was stealing that much of their income. Imagine that
your own employer is stealing tens of thousands of dollars
from you when they're already one of the richest companies
on Earth. That's Amazon for you. The FTC dispersed sixty
eight million dollars of funds drivers. I still think they're
honestly doing it. And the reason I say that is

(11:42):
my my tips always come out as a round number.
It's never like, you know, five dollars and seventeen cents.
It's always five dollars or seven dollars. And you notice
this because sometimes you only get one delivery on your
block and you'll get a five dollar tip, but it's
always round numbers or on a fifth descent. But it's never,
you know, se cents or something like that. It's it's

(12:06):
just a little kind of hanky, you know what I mean.
Bob thinks Amazon is still possibly stealing from his tips.
We don't know, we can't verify that, but that's Bob's hunch.
There are other things that are bothering him as well.
I've listened to this so like Amazon will. Most recently
they have opened up what they call same day deliveries,
so people will get their order within twenty four hours

(12:28):
and it will come out of a central warehouse. And um,
quite often they'll give you a four and a half
hour block and they'll expect you to deliver upwards of
fifty packages in their foin half hours, and quite often.
I mean I've been doing delivery and dispatches stuff for
twenty five years. I know this kind of work. So

(12:49):
they are overloading us first of all, and then when
you run over, you have to literally email and email
and email and email to get over each payments from them,
and half the time like they're like, well, we paid
you for the block you've worked, and and you know
you're not talking a lot of money, You're talking fifty bucks.
But when it happens we after weekly, it adds up.

(13:12):
So you're you're constantly fighting to get those little bits
of money, and Amazon it's like, well, we paid you
for the money or at the time it worked. And
then if you have to take stuff back to the warehouse,
like an undeliverable package or something that's damage or something,
they're not going to pay you for that time either.
So basically, what Bob is saying here is that there
are parts of the Amazon Flex delivery driver role that

(13:34):
you just have to fulfill. For example, if you have
to take a parcel back to the warehouse, stuff like that,
but they're not paying them for this time. Every single
second that they're working on that job is time working
under the Amazon Flex program. They should be paid for
that every second. In my opinion, they're expecting you to
drive across the city to deliver back to their warehouse
and they are not going to pay. How does that

(13:55):
make you feel? You know, you're working this, you're trying
to make a living. How do you feel about all
this kind of shitty? To be honest, I mean, you know,
I do this work because I've had some physical injuries
and I'm able to do this. There's other stuff that
I can't do. I mean, I don't have a real
cupe education or anything like that. So you know, and
I live in an area that the prices have skyrocketed,

(14:16):
so you know, this is the best that I can do.
And you know, in some days it's just like it
really feels like your noses to the grindstone, you know
what I mean. I don't have any version of working.
Some people might say, well, why why don't you just
work somewhere else, you know, or you can be a
contract you know, what would you say to that? They
shut down Colorado almost completely during the pandemic, And this

(14:38):
is one of the few ways that I can make money.
And I mean there's other services out there that you
can work through. You can do grump up or uber
or left, but you know a lot of that depends
on your vehicle size or the age of your vehicle
and stuff like that, so there's constraints on that. Amazon
doesn't really care what you're driving, as long as you
can cram as much crap in your car as you
can and deliver it. You know, they also of precedents

(15:00):
to new drivers, so they'll you know, I've been doing
this for three years. Um, I've got friends that have
been doing it since the program started, and they'll hire,
you know, fifty new drivers and give them all the
work and let the drivers that have been doing it
consistently for years sit there and start for a week.
The kind of cherry on top of the cake is
the support system that they have. We we don't have

(15:24):
any way to actually talk to the people dispatching the runs.
We have UM Driver's Support, which, you know, you you
contact them through the app and you get a phone
call back. And these people are untrained. They have no
clue what we're actually trying to do. UM they don't
even know that, you know. They're like, well, you can

(15:44):
just deliver it later. It's like, well, I'm not being
paid to deliver the package later. They're like, what do
you mean. It's like, well, I'm thirty miles from home.
I Am not going to go home and try and
deliver someone's package in two hours. I'm not being paid
for that, you know. And on top of that is
the time the gas and everything else. No, I mean,
either the people get their package or it goes back

(16:04):
to the world. It's a binary solution set on that
because they're not going to give us any additional money
to hang out to make sure that their packages are
delivered um and then they're like, well, if you have
a problem with that, email ourproath support. So hopefully after
listening to Bob there, you realize that next time you
want to get really angry with your Amazon delivery driver
or whoever else's probably not their fault. As we've just heard,

(16:28):
Amazon and not supplying them with the proper infrastructure they need,
they're not paying them properly, and as we heard at
the top of the episode, they were literally stealing money
from them. The delivery driver is not the enemy, I
promise you. Next week is the final episode of Megacorp,
will be taking a look back over everything we've learned

(16:49):
in this series. Megacorp is made by my production company
H eleven for Cool Zone Media, Written, researched and produced
by myself, Jake Hanrahan. It was also produced by Sophie Lichtman.
Music is by Some Black, graphics by Adam Doyle and

(17:13):
sound engineering by Splicing Block. If you want to get
in touch, follow me on social media at Jake Underscore Hanrahan.
That's h A N A A h A N
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