Walmart Agrees to $100,000,000 Settlement After FTC Says It Misled Drivers on Pay and Tips

Walmart is set to pay $100 million to settle a delivery driver lawsuit filed by the Federal Trade Commission (FTC).

The FTC and 11 US states allege in a complaint that Walmart misled drivers about how much they would earn when making deliveries over the Spark Driver app for the world’s largest retailer.

The FTC accuses Walmart of causing the independent contractor drivers “to lose tens of millions of dollars’ worth of earnings” over four years as a result of the alleged deceptive practices.

Walmart has used the Spark Driver program since 2018, giving gig workers the opportunity to deliver its groceries and other merchandise.

Says the complaint,

“Since at least 2021, Walmart has made false representations to drivers about three key areas of driver earnings: the pre-tips selected by customers at checkout, base pay, and special ‘incentive’ earnings opportunities.

In addition, Walmart has made misrepresentations to its customers about whether their tips will be paid to drivers.”

The FTC says drivers generally decide which jobs to take over the Spark app based on what they expect to earn.

Says Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection,

“Labor markets cannot function efficiently without truthful and non-misleading information about earnings and other material terms.”

The complaint accuses Walmart of several deceptive actions, including failing to disclose the tips on deliveries were not preauthorized and they could end up receiving a lesser tip or none at all. Also, Walmart is accused of not fully explaining the requirements needed to qualify for driver incentive payments.

Furthermore, the complaint alleges that Walmart deceived customers by falsely claiming 100% of their tips would go to drivers, when the company did not always pass on the full tip amount to the drivers.

As part of the settlement, Walmart agrees to pay drivers about $79 million to cover the difference between any earnings or tips shown to a driver when accepting the delivery and what they actually received as well as incentives that were not paid out. About $62.8 million of that amount, Walmart has already paid to drivers.

Walmart will also pay the FTC $10 million and the remaining $11 million will be divided among the 11 states that joined the lawsuit, including Arizona, California, Colorado, Illinois, Michigan, North Carolina, Oklahoma, Pennsylvania, South Carolina, Utah and Wisconsin.

In settling, Walmart neither admits nor denies any of the allegations in the complaint.

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