The U.S. Federal Trade Commission (FTC) announced on Feb. 26 that global retail giant Walmart has given the green light to a $100 million judgment to settle allegations that the company caused delivery drivers to lose tens of millions of dollars worth of earnings through alleged deception regarding base pay, incentive pay, and tips.

Litigation brought by the FTC and 11 states indicated that Walmart presented drivers in its Spark Drive delivery program with inflated base pay and tip amounts, and deceived both customers and drivers by falsely claiming that 100 percent of customer tips would go to the drivers. States included Arizona, California, Colorado, Illinois, Michigan, North Carolina, Oklahoma, Pennsylvania, South Carolina, Utah and Wisconsin.

Both the complaint and final order were filed in the U.S. District Court for the Northern District of California.

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

“Today’s settlement reflects the Trump-Vance FTC’s focus on ensuring a healthy labor market for American workers, which is critical to the nation’s success.”

Walmart owns and operates Spark Delivery, which functions much like Uber Eats, where independent contractors use their own vehicles to pick up and deliver orders. Drivers can decide whether or not to accept offers to deliver goods.

Complaints from Spark drivers included deception about the amount of tips they can receive from the order. The lawsuit alleged that Walmart failed to notify drivers that the payment for the advertised tip amount had not been pre-authorized and that drivers would not receive that amount if the customer was unable to cover the cost of the tip or if the customer’s credit card was declined. In addition, drivers were not informed that they had to split tips when a customer’s delivery was split across multiple drivers.

In addition, Walmart allegedly failed to let drivers know that their base pay and tips would be reduced from batched orders, which involve delivering products to multiple customers during one trip.

The retailer was also accused of misrepresenting “incentive pay.”

“For example, Walmart has offered to provide drivers a referral incentive when they refer new drivers to the service, yet failed to adequately disclose that it will only pay the incentive if the newly recruited driver performs deliveries in a particular zone or for a particular store,” the FTC statement indicates.

According to the FTC, Walmart’s alleged actions violated both the FTC Act and the Gramm-Leach-Bliley Act—by obtaining drivers’ financial information while deceiving them about the amount of base pay and tips they would earn.

As part of the settlement, Walmart will be required to initiate an earnings verification program to ensure drivers are paid the promised earnings and tips, and will be banned from misrepresenting those earnings included in its delivery offers.

In addition, the retailer will be prohibited from modifying an offer for base and inventive pay or tips after the initial offer, except if the customer cancels an order or a driver fails to deliver the order.

“We value the hard work and dedication of the drivers who deliver great service and products to our customers,” a company spokesperson said in an email statement to The Epoch Times.

“We have issued payments to impacted drivers and continue to make additional payments as appropriate. We are continuously improving procedures to ensure fairness and transparency for drivers.”