almart has agreed to a $100 million judgment to settle allegations by the Federal Trade Commission and 11 states that the company caused delivery drivers to lose earnings, by deceiving them about the base pay, incentive pay, and tips they could earn. The FTC estimates that Walmart delivery drivers lost tens of millions of dollars in earnings due to the deception.
The proposed order also imposes significant changes to Walmart’s business practices to ensure that Walmart “never engages in such behavior again.” The injunction prohibits Walmart from modifying offers after a driver has accepted the offer, unless one of six exceptions applies. It also prohibits Walmart from making or assisting others in making similar misrepresentations to drivers or customers in the future.
Joined by Arizona, California, Colorado, Illinois, Michigan, North Carolina, Oklahoma, Pennsylvania, South Carolina, Utah, and Wisconsin, the FTC alleged in its complaint that Walmart lured drivers into its Spark Driver delivery program with inflated base pay and tip prospects. The complaint claims Walmart deceived customers by falsely proposing that 100 percent of customer tips would go to drivers.
“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. “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.”
The FTC says the enforcement action against Walmart is a result of it’s Joint Labor Task Force which was created by the cross-agency Labor Task Force to “root out and prosecute deceptive, unfair, and anticompetitive labor-market practices that harm American workers.” It also said the it’s dual consumer-protection and competition mandate makes the agency uniquely well-suited to address these worker harms. “Chairman Ferguson’s Labor Task Force harnesses expertise from the agency’s Bureau of Consumer Protection, Bureau of Competition, Bureau of Economics, and Office of Policy Planning.”
Walmart uses its Spark Driver service to deliver goods to customers using gig workers via the Spark Driver app, similar to Door Dash or Uber Eats. Those workers decide whether to accept “offers” to deliver orders, based on Walmart’s statements about the base pay and tips that a driver can expect to receive if they complete the work.
Details of allegations against Walmart.
The complaint alleges that Walmart engaged in several deceptive practices related to its Spark Driver service, including:
- Deceiving drivers about the number of tips they will receive from an order— the company failed to notify drivers that, unlike the payment for the goods being delivered, the payment for the advertised tip amount had not been preauthorized, and therefore drivers would not receive that amount if the customer was unable to cover the cost of the tip or if the charge otherwise failed. The company also failed to inform drivers that it would split tips when a customer’s delivery was split across multiple drivers.
- Deceiving drivers about the amount of base pay and tips they will receive when Walmart modifies “batched” offers— the company failed to inform drivers that it will reduce their base pay and/or tips when it removes orders from “batched orders,” which involve delivering goods to multiple customers during one trip. In many instances, Walmart either failed to notify drivers at all about the change in base pay and tips or only notified them of the change in their earnings after they completed the delivery.
- Misrepresenting the incentive pay drivers can earn in exchange for completing certain tasks— the company failed to disclose all the conditions that must be met to earn the promised incentive pay for completing certain tasks and denied the promised earnings on the basis that drivers failed to meet all the conditions.
- Deceiving consumers that “100% of tips go to the driver.” — despite this promise, Walmart, on multiple occasions, failed to provide collected tips to drivers as promised and did not refund the tip to customers either.
The FTC alleges that these practices violated the FTC Act and the Gramm-Leach-Bliley Act—by obtaining drivers’ bank and other financial information while deceiving them about the amount base pay and tips they will earn from Spark Driver deliveries—as well as laws of the agency’s state partners.
As part of the proposed order, Walmart is:
- Required to implement an earnings verification program to ensure drivers are paid the promised earnings and tips.
- Prohibited from modifying an offer for base and incentive pay or tips after the initial offer except under limited circumstances such as when the driver fails to provide the required service or the customer cancels an order.
- Banned from misrepresenting the earnings and other information included in the delivery offers it makes to Spark drivers.
If Walmart fails to obey this injunction, the Commission can return to Court in contempt proceedings. 