Walmart to Pay $100 Million Over Spark Driver Earnings Claims After FTC & State Action

Key Takeaways

• $100 Million Judgment: Walmart agreed to a $100 million judgment to settle allegations from the FTC and 11 states that it misled Spark drivers about base pay, tips, and incentive compensation.
• Inflated and Unclear Earnings Representations: The complaint alleges Walmart showed drivers inflated tip and base pay amounts, failed to disclose that tips were not preauthorized, and reduced pay on modified batched orders without adequate notice.
• Incentive Pay Disputes: The FTC alleged Walmart did not clearly disclose all conditions tied to bonuses and, in some cases, failed to pay promised incentives even when conditions were met.
• Consumer Tip Representations at Issue: Despite advertising that “100% of tips go to the driver,” the FTC alleges Walmart did not always pass collected tips to drivers or refund customers.
• Operational Compliance Mandates: The proposed order requires Walmart to implement an earnings verification program and restricts post-offer modifications to pay, while prohibiting future misrepresentations.

Deep Dive

Walmart has agreed to a $100 million judgment to settle allegations that it misled gig workers about how much they would earn delivering orders through its Spark Driver platform, closing out a case brought by the Federal Trade Commission and 11 states.

The lawsuit, filed in federal court in Northern California, centers on what drivers were shown before they accepted a delivery and what they ultimately received after the job was done. According to the complaint, Walmart’s representations about base pay, tips, and incentive bonuses caused drivers to lose tens of millions of dollars in expected earnings.

Arizona, California, Colorado, Illinois, Michigan, North Carolina, Oklahoma, Pennsylvania, South Carolina, Utah, and Wisconsin joined the FTC in the action.

What Drivers Were Told and What They Received

Walmart’s Spark Driver service relies on gig workers who use an app to review delivery “offers.” Those offers include projected base pay and tips, information drivers use to decide whether a trip is worth their time.

The FTC alleges those projections did not always reflect reality.

In some cases, the complaint says, drivers were shown tip amounts that had not been preauthorized. If a customer’s payment failed or the tip could not be processed, drivers would not receive the advertised amount. The agency also alleges that Walmart did not clearly inform drivers that tips could be split if a delivery was divided among multiple drivers.

The complaint further alleges that when Walmart modified so-called “batched” orders (deliveries involving multiple customers in one trip) it sometimes reduced base pay or tips without adequately notifying drivers. In certain instances, drivers allegedly learned about changes to their earnings only after completing the delivery.

Incentive pay is another flashpoint. The FTC alleges Walmart failed to disclose all conditions tied to promised bonuses, including referral incentives. For example, drivers who referred others to the platform allegedly were not told that bonuses would be paid only if the new driver completed deliveries in a specific zone or store. Even when drivers met conditions, the complaint alleges, promised incentive payments were sometimes not made.

The case also extends beyond drivers. The FTC alleges Walmart told consumers that “100% of tips go to the driver,” yet on multiple occasions failed to pass along collected tips and did not refund them to customers.

Legal Theories and Broader Enforcement Context

The FTC alleges that the conduct violated the FTC Act as well as the Gramm-Leach-Bliley Act, arguing that Walmart obtained drivers’ bank and financial information while allegedly misrepresenting how much they would earn. State partners brought related claims under their own laws.

“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 announcing the settlement. He said the action reflects the agency’s focus on protecting workers from deceptive labor-market practices.

The case aligns with the FTC’s Joint Labor Task Force, launched by Chairman Andrew N. Ferguson last year. The cross-agency initiative draws on the Bureau of Consumer Protection, Bureau of Competition, Bureau of Economics, and Office of Policy Planning to address what the Commission describes as deceptive, unfair, and anticompetitive conduct affecting workers.

Under the proposed stipulated final order, Walmart must implement an earnings verification program designed to ensure drivers receive the base pay, tips, and incentives they were promised. The company is also barred from modifying base pay, incentive pay, or tips after an initial offer is made, except in limited circumstances such as when a driver fails to provide required services or a customer cancels an order.

The order further prohibits Walmart from misrepresenting earnings or other material information in Spark Driver delivery offers.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.