FTC takes action against gig company Arise for misleading consumers about earnings potential
- The Federal Trade Commission is holding Arise accountable for deceptive consumer practices.
- Arise allegedly misrepresented the income possibilities on its gig work platform.
- Consumers were misled about their potential earnings, leading to regulatory action.
In a recent development, the Federal Trade Commission (FTC) has taken action against Arise Virtual Solutions, a gig work company, accusing it of deceiving individuals about potential earnings on its platform. Following the allegations, Arise has agreed to a settlement with the FTC, agreeing to pay $7 million to workers affected by the company's alleged misconduct. The FTC Chairwoman, Lina Khan, emphasized that operating in the gig economy does not exempt companies from complying with the law, and the FTC will continue to safeguard Americans from unlawful business practices. Arise Virtual Solutions, a technology platform connecting major companies with freelance customer service agents, has been accused of enticing workers with misleading promises regarding potential earnings while requiring them to cover expenses for essential equipment and training. Despite Arise's disagreement with the FTC's claims, the company stated that the settlement is not an admission of liability but a means to avoid the distractions and costs of prolonged litigation. The company reiterated its commitment to supporting entrepreneurs in a flexible work environment. The FTC's complaint highlighted Arise's misleading advertisements, claiming individuals could earn up to $18 per hour for remote customer service work upon joining the platform. However, prospective workers were reportedly required to invest significant sums in equipment and training programs, with many not securing jobs after paying for these prerequisites. The FTC's actions against Arise also included a violation of the Business Opportunity Rule, marking the first instance of the FTC charging a company with this offense. Experts, including attorney Shannon Liss-Riordan and business professor Erik Gordon, have expressed skepticism about the $7 million settlement's impact on Arise's business practices. They hope that this enforcement action serves as a warning to other gig work platforms, emphasizing the importance of providing transparent disclosures to workers regarding potential earnings and business opportunities to prevent misleading practices in the future.