12:32 PM EST, 02/07/2025 (MT Newswires) -- (Updates with Amazon's ( AMZN ) comment in the fourth paragraph.)

Amazon.com ( AMZN ) agreed to pay $3.95 million to the District of Columbia to resolve a lawsuit alleging the company stole tips intended for delivery workers, Attorney General Brian Schwalb said Friday.

In 2022, the Office of the Attorney General sued Amazon ( AMZN ), claiming the company misled customers into thinking their tips would go to Amazon Flex delivery drivers, but instead, most of the tips were used to lower Amazon's ( AMZN ) labor costs and boost profits.

After previous legal action, Amazon ( AMZN ) drivers were already reimbursed for lost wages. The retailer, along with Amazon Logistics, will now pay $2.45 million in penalties and $1.5 million to cover costs. Amazon ( AMZN ) is also required to be transparent about its tipping practices by clearly stating how the tips are being used on both its website and app, Schwalb said.

"Amazon Flex has evolved over time, and this lawsuit relates to a practice we changed more than five years ago," Amazon ( AMZN ) spokesperson Steve Kelly said in an emailed statement to MT Newswires. "While we continue to disagree with these allegations, we're happy to have the matter behind us so we can continue to focus on supporting delivery partners and customers."

Amazon ( AMZN ) shares fell 4% in recent Friday trading.

Price: 229.33, Change: -9.50, Percent Change: -3.98