Walmart will pay $100 million to settle allegations by the U.S. Federal Trade Commission over how the company presented pay and tips in its Spark delivery gig program, the FTC said Thursday.
The FTC said Walmart caused delivery drivers to lose “tens of millions of dollars’ worth of earnings” by allegedly deceiving drivers about what they could earn and by allegedly misrepresenting where customer tips would go, according to the commission’s statement.
The FTC said 11 states joined the settlement with the federal agency: Arizona, California, Colorado, Illinois, Michigan, North Carolina, Oklahoma, Pennsylvania, South Carolina, Utah and Wisconsin.
In the FTC’s account, Walmart showed Spark drivers inflated base pay and tip amounts in the crowdsourced gig delivery program it launched in 2018. The FTC also alleged Walmart deceived customers by falsely claiming that all of its customer tips would actually go to drivers.
The commission further alleged Walmart failed to inform drivers that it would split tips when a customer’s delivery was split across multiple drivers. Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, said the issue is larger than a single platform’s operations, arguing that labor markets cannot function efficiently without truthful, nonmisleading information about earnings and other material terms.
As part of the settlement, the FTC said Walmart is required to implement an earnings verification program intended to ensure drivers are paid the promised earnings and tips, along with other orders in the agreement. Walmart has credited Spark’s speedy delivery with helping drive its sales growth, and it previously said its e-commerce business increased 27% during its fiscal fourth quarter, accounting for 23% of overall sales.
Walmart said in a statement emailed to The Associated Press that it values “the hard work and dedication of the drivers who deliver great service and products to our customers.” The company said it has issued payments to affected drivers and continues to make additional payments as appropriate, and that it is “continuously improving procedures to ensure fairness and transparency for drivers.”