Walmart has agreed to pay $100 million to settle a lawsuit from the Federal Trade Commission over deceptive pay practices within its Spark Driver service. The service uses gig workers to deliver online orders from local stores to customers. The retailer was accused of misleading drivers about their potential base pay and tip amounts. It also deceived customers by claiming that 100% of tips went to the drivers, when in fact they did not.
The FTC was joined by the states of Arizona, California, Colorado, Illinois, Michigan, North Carolina, Oklahoma, Pennsylvania, South Carolina, Utah, and Wisconsin in the original complaint. The lawsuit alleged that Walmart, since 2021, had made false representations about Spark driver earnings.
Among the specific accusations, Walmart frequently split a customer’s order between drivers, which led to the tip being split. Meanwhile, customers were told their single driver would get the full tip. For batch orders, Walmart would remove tips from some of the orders without informing the driver. Walmart also promised tips to drivers in advance of taking orders, but then failed to collect a tip from the customer, leaving the driver without a tip entirely.
Other issues involved reductions Walmart made to drivers’ base pay after they had accepted an offer, along with other misrepresented incentives that could have provided drivers with extra cash. Walmart told customers that drivers would get 100% of their tips, but that was not always true.
The lawsuit alleged these practices caused drivers to lose millions of dollars they were promised and generated thousands of consumer complaints.
As a result of the settlement, Walmart will have to implement an earnings verification program to ensure drivers are paid the promised earnings and tips. It is also prohibited from adjusting the base pay, incentives, or tips after the initial offer, except if the driver fails to provide the service or a customer cancels. Walmart has been banned from misrepresenting earnings in future driver offers.
“Labor markets cannot function efficiently without truthful and non-misleading information about earnings and other material terms,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, in a statement about the settlement agreement. “Today’s settlement reflects the Trump-Vance FTC’s focus on ensuring a healthy labor market for American workers, which is critical to the nation’s success.”