Walmart to pay $100 million to settle FTC allegations over deceptive practices for delivery drivers

Audio By Carbonatix

NEW YORK (AP) — Walmart Inc. has agreed to pay $100 million to settle allegations from the U.S. Federal Trade Commission that the retailer caused its delivery drivers to lose tens of millions of dollars’ worth of earnings by deceiving them about their pay and tips they could make, the commission said ‌in a ​statement ​on Thursday.

Joined by 11 states — Arizona, California, Colorado, Illinois, Michigan, North Carolina, Oklahoma, Pennsylvania, South Carolina, Utah and Wisconsin — the FTC alleges that the Bentonville, Arkansas-based retailer showed drivers inflated base pay and tip amounts in its crowdsourced gig driver delivery program called Spark.

The FTC alleges that the retailer deceived customers by falsely claiming that all of its customer tips would actually go to drivers. The commission also alleges that Walmart failed to inform drivers that it would split tips when a customer’s delivery was split across multiple drivers.

“Labor markets cannot function efficiently without truthful and nonmisleading information about earnings and other material terms,” said Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, in a statement.

As part of its settlement with the FTC, Walmart is required to implement an earnings verification program to ensure that drivers are paid the promised earnings and tips, among other orders.

Walmart launched its Spark program in 2018, allowing gig workers to enlist to make deliveries for the retailer.

Walmart has credited its speedy online deliveries for helping to fuel the company's sales growth. Its e-commerce business increased 27% during the fiscal fourth quarter, accounting for 23% of overall sales.

Walmart said in a statement e-mailed to The Associated Press that it values "the hard work and dedication of the drivers who deliver great service and products to our customers.” It noted that it has issued payments to affected drivers and continues to make additional payments as appropriate.

“We are continuously improving procedures to ensure fairness and transparency for drivers,” Walmart said.