Walmart agrees to $100M settlement over deceptive pay practices in Spark Driver program

Source: TechCrunch

Overview

Walmart has agreed to pay $100 million to settle a lawsuit from the Federal Trade Commission (FTC) over deceptive pay practices within its Spark Driver program, which uses gig workers to deliver online orders from local stores to customers.

The FTC’s original complaint was joined by Arizona, California, Colorado, Illinois, Michigan, North Carolina, Oklahoma, Pennsylvania, South Carolina, Utah, and Wisconsin. The lawsuit alleged that, since 2021, Walmart made false representations about Spark driver earnings.

Allegations

• Tip splitting: Walmart frequently split a customer’s order among multiple drivers, which also split the tip, while customers were told that a single driver would receive the full tip.
• Tip removal: In batch orders, Walmart removed tips from some orders without informing the driver.
• Uncollected tips: Walmart promised tips to drivers before orders were taken, but then failed to collect a tip from the customer, leaving the driver without any tip.
• Base‑pay reductions: Walmart reduced drivers’ base pay after they had accepted an offer.
• Misleading incentives: The company misrepresented incentives that could have provided drivers with extra cash.

These practices allegedly caused drivers to lose millions of dollars they were promised and generated thousands of consumer complaints.

Settlement Terms

• Walmart must implement an earnings‑verification program to ensure drivers are paid the promised earnings and tips.
• The company is prohibited from adjusting base pay, incentives, or tips after the initial offer, except when a driver fails to provide the service or a customer cancels.
• Walmart is banned from misrepresenting earnings in future driver offers.

FTC Statement

“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 FTC’s focus on ensuring a healthy labor market for American workers, which is critical to the nation’s success.”