WASHINGTON, D.C. – Oklahoma was one of 11 states to join the Federal Trade Commission in a lawsuit brought against Walmart for deceptive pay practices within its Spark Driver program.
The suit alleged the large U.S. retailer deceived Spark drivers about the amount of base pay, tips and incentive pay they would receive for deliveries, potentially causing the gig drivers to lose tens of millions of dollars in earnings. Walmart’s Spark Driver service operates from an app and contracts with drivers to deliver goods to customers. Workers decide to accept offers or not to deliver orders based on anticipated base pay and tips if the delivery is completed.
At the end of February, Walmart agreed to pay a $100 million judgment to settle the allegations of deceptive pay practices. The 70-page complaint was filed in the U.S. District Court Northern District of California for permanent injunction, monetary judgment, civil penalty judgment and other relief. Oklahoma Attorney General Gentner Drummond joined the FTC deceptive trade suit on behalf of Oklahomans and included allegations that Walmart violated the Oklahoma Consumer Protection Act.
The FTC complaint, which can be viewed at ftc.gov/system/ files/ftc_gov/pdf/WalmartSpark-DriverComplaint, states that “since at least 2021, Walmart has made false representations to Drivers about three key areas of Driver earnings: the pretips selected by Customers at checkout, base pay, and special “Incentive” earnings opportunities. In addition, Walmart has made misrepresentations to its Customers about whether their tips will be paid to Drivers.”
For example, in regard to tips, “When Walmart splits a Customer’s order among multiple Drivers (something not told to Drivers and which Drivers cannot ascertain themselves), Walmart frequently tells each Driver that they will receive the Customer’s full tip amount. After the Drivers complete the work, however, Walmart divides the tip among all the delivering Drivers, resulting in Drivers receiving significantly less than the tip amount that Walmart represented.”
Wrongdoing by Walmart was also cited in the complaint that the retailer reduced base pay without notifying drivers and misrepresented extra earning opportunities known as incentives.
“Walmart has long been aware of the harms caused by its deceptive practices, which have generated thousands of consumer complaints to Walmart, Spark support contacts, internal Walmart audits, and negative social media posts. Rather than address these well-known issues, however, Walmart has persisted in these practices and continues to attract and retain Drivers and Customers to Spark with false earning claims and misleading representations,” the complaint said.
The Spark Driver program was launched in 2018 to allow Walmart to compete in the ecommerce and delivery market. Customers order items from Walmart.com and the retailer uses the Spark app to distribute delivery offers to drivers.
“Spark has grown exponentially since its inception and is currently one of the largest last-mile merchandise delivery services in the country. It operates in all fifty states and the District of Columbia, with more than a million unique Drivers having made 355 million deliveries from more than 4,200 Walmart stores across 17,000 unique pickup points,” the complaint said.
The FTC reported in a press release that as part of the proposed order, Walmart is required to complete the following items, in addition to paying the judgment:
•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; and
•Banned from misrepresenting the earnings and other information included in the delivery offers it makes to Spark drivers.