The Consumer Financial Protection Bureau has filed a lawsuit against Walmart and fintech company Branch Messenger, claiming that they have compelled over one million delivery workers to utilize costly deposit accounts in order to receive their paychecks.
The CFPB announced in a news release on Monday that companies opened deposit accounts for Walmart drivers using their personal information, including social security numbers, without proper authorization.
CFPB Director Rohit Chopra stated in the release that “Walmart made false promises, illegally opened accounts, and took advantage of more than a million delivery drivers.” “It is unacceptable for companies to compel employees to receive their wages through accounts that diminish their earnings with unnecessary fees.”
A lawsuit has been filed alleging that in 2021, Walmart and Branch established Branch Accounts for over one million drivers participating in the Spark Driver program. This program serves as Walmart’s platform for gig economy workers to manage and schedule “last mile” deliveries. The lawsuit claims that drivers’ earnings were subsequently deposited into these accounts without their consent.
The CFPB announced that drivers would face termination if they opted out of using the service.
According to the CFPB’s release, Walmart and Branch allegedly provided misleading information to workers regarding the availability of same-day access to their earnings. Drivers encountered a complicated procedure to access their funds. Once they managed to do so, they were met with additional delays or fees if they wished to transfer their earnings into a preferred account.
Workers reportedly faced over $10 million in “junk fees” when attempting to transfer their funds into accounts of their choosing.
The CFPB has alleged that Walmart and Branch misled drivers into believing that Branch Accounts would provide them with “instant access” to their pay; however, drivers reportedly faced delays in accessing their funds.
Walmart has refuted the claims made by the CFPB, asserting its intention to mount a legal defense, as stated in a communication to Nexstar’s KNWA/FOX24.
“The lawsuit filed by the CFPB has been criticized for being hastily prepared, with claims of factual inaccuracies, exaggerations, and clear misrepresentations of established legal principles.” The CFPB did not provide Walmart with a fair chance to present its case amid a hurried investigation. The Company is prepared to mount a robust defense in court, where due process of law is respected, in contrast to the CFPB.
Branch issued a statement that reflected this sentiment.
Branch has expressed strong opposition to the lawsuit initiated by the CFPB, asserting that it misrepresents both the law and the facts, while also containing deliberate omissions intended to obscure the Bureau’s evident overreach. Branch has delivered essential services to Walmart and its driver partners, facilitating swift and straightforward access to funds through their business accounts.
