Walmart Agrees to $100M FTC Settlement Over Driver Pay

Walmart has agreed to pay $100 million to settle Federal Trade Commission (FTC) claims that the retailer misled delivery drivers about the pay and tips they could earn. The FTC alleged Walmart caused drivers with its delivery service, Spark, to lose tens of millions of dollars worth of earnings by showing them inflated figures for what they could expect to earn from pre-tips selected by customers at checkout, base pay and special incentive earnings opportunities.

Walmart deceived customers by falsely claiming 100 percent of their tips would go to drivers, but the company charged customers for tips that drivers didn’t receive, the FTC said in a complaint filed in federal court in California.

Total Retail's Take: As part of the settlement with the FTC, Walmart will pay $89 million in nationwide monetary relief, including funds to compensate drivers, as well as $11 million to participating states. Furthermore, the retailer will implement an earnings verification program to ensure drivers are paid the full amount shown when they accept a delivery offer. Furthermore, it agreed to stop modifying offers after drivers accept them and to submit annual reports to the FTC for 10 years to verify compliance.

In the race to secure workers for essential services such as order fulfillment and delivery, it appears as though Walmart was overselling what employees would receive in compensation. This settlement with the FTC, while not an admission of guilt on the part of Walmart, does signify that the retailer recognizes its Spark delivery service needs to be held to a higher level of scrutiny. With customer experience a core component of consumers' decision-making processes, it's wise for Walmart to take swift and significant action to win back the trust and favor of its delivery drivers, who of course have a direct relationship with the retailer's customers.