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

NEW YORK — The Federal Trade Commission is taking action against a gig work company, which it says misled people about the money they could earn through its platform.

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

“Arise lured workers with false promises of what they could earn while demanding that they pay out of pocket for essential equipment, training, and other expenses,” FTC Chair Lina Khan said in a statement Tuesday. “Working in the gig economy is not a license to evade the law, and the FTC will continue to use all of its resources to protect Americans from abusive business practices.”

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

“While we strongly disagree with the FTC’s allegations and characterization of the facts, we reached this settlement — which is not an admission or finding of liability or wrongdoing — so that we can continue to move our business forward without the continued distraction and expense of litigation,” Arise said in a statement. “We stand by our mission to help entrepreneurs thrive in an environment where they can build their businesses around flexible work as independent contractors providing services to world-class companies.”

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

According to the FTC, 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 they can work on the platform.

“They sell them these trainings that they have to pay for, but a large portion of them don’t pass the training and don’t get the job, so they just pay for nothing,” said Shannon Liss-Riordan, attorney and founder of Lichten & Liss-Riordan, a Massachusetts law firm, has sued Arise multiple times on behalf of its employees. “I can’t imagine $7 million will change the way we do business, but hopefully it will be a wake-up call that Arise’s practices will be scrutinized more closely by more parts of the government.”

The FTC also said Arise violated the Business Opportunity Rule, which requires potential employees to receive key information about income claims before they invest time and money in a business opportunity. It was the first time the FTC had charged a company with that violation.

That decision could hurt more gig work platforms because “even if the platform does nothing to mislead workers, the platform could be in violation of the rule if it fails to provide workers with a comprehensive disclosure document,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business.