Walmart Settles $100M Over Driver Pay Misrepresentation

Background of the FTC Allegations

The Federal Trade Commission (FTC), along with 11 U.S. states, accused Walmart of misrepresenting driver pay and customer tip distribution within its Spark delivery program. According to the FTC, Walmart provided misleading information to both customers and drivers. Customers were led to believe that their tips would go directly and fully to the delivery drivers. However, the FTC alleges that Walmart failed to disclose that tips were often split among multiple drivers or not fully allocated as advertised.

This alleged misrepresentation resulted in significant financial losses for Spark drivers, with the FTC estimating tens of millions of dollars in lost earnings. Complaints from drivers revealed discrepancies between expected and actual earnings, contributing to dissatisfaction and undermining trust in the platform. The FTC argued that these practices distorted labor market dynamics by failing to provide accurate information about compensation.

Settlement Terms and Walmart's Response

Walmart agreed to a $100 million settlement to resolve the allegations, with $79 million allocated to reimburse affected delivery drivers. The settlement also includes $10 million to the FTC and $11 million to the participating states. In addition to the financial settlement, Walmart is required to implement new policies ensuring transparency in driver pay. This includes a mandate to accurately disclose how tips and earnings are distributed, alongside verifying that drivers receive the compensation promised.

In its response, Walmart emphasized its commitment to fair pay and transparency. The company noted that it has already begun compensating affected drivers and pledged to continue improving its systems to prevent similar issues in the future. Walmart stated that it values the contributions of its delivery drivers and recognizes their role in the company's success. The retailer also credited its Spark program for bolstering e-commerce growth, which saw a 27% increase in the fiscal fourth quarter.