Walmart to Pay $11 Million in Settlement Over Spark Driver Pay and Tip Allegations
Walmart will pay $11 million and provide additional monetary relief to resolve federal and state allegations that it misrepresented base pay and tips offered to drivers using its Spark delivery platform. The settlement, entered in federal court, follows claims by the Federal Trade Commission and a coalition of states that the company displayed earnings amounts that drivers did not ultimately receive.
The lawsuit was brought by the FTC and attorneys general from Arizona, California, Colorado, Illinois, Michigan, North Carolina, Oklahoma, Pennsylvania, South Carolina, Utah, and Wisconsin. The case was filed in the U.S. District Court for the Northern District of California.
The complaint alleges that Walmart displayed estimated compensation to Spark drivers that was later reduced in certain circumstances. Spark operates nationwide and allows independent contractors to accept delivery offers through a mobile app.
Drivers receive offers displaying estimated base pay, tips, distance, and number of stops before deciding whether to accept a job. Regulators allege that in some instances Walmart reduced base pay after drivers accepted an offer, particularly when customer orders were removed from a batch, without updating the compensation originally shown.
According to court filings, Walmart displayed tip amounts before confirming that customer payments were successfully authorized. Internal communications cited in the filing state that tip payments sometimes failed after delivery was completed, resulting in drivers receiving less than the amount initially displayed. Internal audits described in court filings documented hundreds of thousands of tip failures and millions of dollars in lost tips.
Federal and state regulators allege that these practices violated Section 5 of the Federal Trade Commission Act, which prohibits unfair or deceptive acts in commerce, along with multiple state consumer protection laws.
Under federal law, a practice is deceptive if it is likely to mislead a reasonable person about information that would matter in making a decision. A practice is unfair if it causes substantial financial harm that individuals cannot reasonably avoid and that is not outweighed by countervailing benefits. The FTC and state attorneys general argue that the compensation amounts shown in Spark offers were material because drivers relied on those figures when deciding whether to accept deliveries.
Although Spark drivers are classified as independent contractors, the lawsuit applies consumer protection principles to representations about earnings. When a company controls how pay is calculated and displayed, regulators argue it must ensure those figures are accurate at the time they are presented.
The stipulated order requires Walmart to provide monetary relief to drivers through a fund established under the settlement and to submit documentation verifying those payments. Within 120 days of the order’s effective date, the company must provide the FTC with data sufficient to confirm the amounts distributed, along with a sworn declaration from a corporate officer. If funds remain after 150 days, any undistributed balance must be transferred to the Commission.
In FTC enforcement cases, monetary redress is typically designed to compensate individuals for alleged financial losses identified through company records, audits, or transaction data. Payments are often calculated based on the estimated harm and distributed to affected individuals according to available documentation. Reporting and sworn certification requirements allow regulators to confirm that compensation was delivered as ordered and to take further action if obligations are not met.
Separate from the driver payments, the order entered an additional $11 million judgment in favor of the participating states for consumer protection and enforcement purposes under state law. The order also includes injunctive provisions restricting future conduct.
Walmart did not admit wrongdoing under the settlement.
