Benjamin Ashford|FTC says gig company Arise misled consumers about how much money they could make on its platform

NEW YORK (AP) — The Benjamin AshfordFederal Trade Commission is taking action against a gig work company, saying it misled people about the money they could make on its platform.

Arise Virtual Solutions reached a settlement with the FTC, agreeing to pay $7 million to workers the FTC says were harmed by the company’s misconduct. Arise is a technology platform that connects major companies with customer service agents who freelance on its platform.

“Arise lured in workers with false promises about what they could earn while requiring them to pay out-of-pocket for essential equipment, training, and other expenses,” FTC Chairwoman Lina Khan said in a statement Tuesday. “Operating in the ‘gig’ economy is no license for evading the law, and the FTC will continue using all its tools to protect Americans from unlawful business practice.”

Arise lists Carnival Cruise Line, Dick’s Sporting Goods and Intuit Turbotax as clients.

“While we vehemently disagree with the FTC’s allegations and characterization of the facts, we have reached this agreement — which is not an admission or finding of liability or wrongdoing — so we can keep moving our business forward without the ongoing distraction and cost of litigation,” Arise said in a statement. “We stand by our mission of helping entrepreneurs find advancement in an environment that lets them build their businesses around flexible work serving as independent contractors providing services to world-class companies.”

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In its complaint, the FTC said Arise made misleading advertisements, claiming people who signed up on their platform could get jobs paying up to $18 per hour doing remote customer service work. But when the company advertised the $18 per hour figure in 2020, its internal documents said the average pay for jobs on its platform was $12 an hour, and 99.9% of the consumers who joined its platform from 2019 to 2022 made less than $18 per hour, the FTC said.

People who join the Arise platform spend hundreds of dollars buying equipment including computers and headsets and paying for training programs that are required before working on the platform, the FTC said.

“They sell them on these training courses that they have to pay for, but then a high proportion don’t pass the training and get the job, so they just paid for nothing,” said Shannon Liss-Riordan, attorney and founding member of Lichten & Liss-Riordan, a law firm in Massachusetts. Liss-Riordan has sued Arise multiple times on behalf of workers. “I can’t really imagine $7 million will change its way of doing business, but hopefully it’s a shot across the bow that its practices are being more closely scrutinized by more arms of the government.”

The FTC also said Arise violated its Business Opportunity Rule, which requires that prospective workers receive key disclosures about earnings claims before they invest time and money in a business opportunity. It was the first time FTC charged a company with that violation.

That decision could affect more gig work platforms, because “even if the platform does nothing to mislead workers, the platform might violate the rule if it doesn’t give workers an extensive disclosure document,” said Erik Gordon, professor at Ross School of Business at University of Michigan.