More than one million delivery drivers collectively paid over $10 million in fees after Walmart and Branch Messenger allegedly opened costly deposit accounts in their names without consent, as per a lawsuit filed by the Consumer Financial Protection Bureau on Monday against the retailer and payments platform. The federal agency claims drivers were compelled to use these accounts to receive their payments and were misled about how to access their earnings, with Walmart allegedly threatening to terminate employees who did not comply. Drivers were reportedly required to navigate a convoluted process to access their pay, leading to additional delays or fees if they wished to transfer the money to another account. Consequently, the CFPB asserts that workers handed over more than $10 million in fees to transfer their earnings into accounts of their preference.
“Walmart made false promises, unlawfully opened accounts, and exploited more than a million delivery drivers,” stated CFPB Director Rohit Chopra in a news release. “Companies cannot coerce employees into receiving payments through accounts that deplete their earnings with unnecessary fees.”
Both Walmart and Branch have pledged a robust defense against the allegations. “The CFPB’s hurried lawsuit is fraught with factual inaccuracies and comprises exaggerations and blatant misinterpretations of established legal principles. The CFPB did not afford Walmart a fair opportunity to present its case during their hurried investigation,” the retailing giant conveyed in a statement emailed to CBS MoneyWatch. Branch echoed Walmart’s position, denouncing the CFPB for distorting “the law and facts.” The suit, according to Branch, “intentionally omits” vital information to mask what the company deems as the bureau’s “overreach.”
Branch asserted that it has provided Walmart and their driver partners with valuable services enabling swift and convenient access to funds via their business accounts — a pivotal detail purportedly left out from the bureau’s press release. The CFPB claims in its lawsuit that the two entities breached federal law over a two-year period commencing in 2021. Both the company and Branch are accused of utilizing drivers’ personal information, including their Social Security numbers, to open accounts without consent. Payments meant for drivers were then funneled into these unauthorized accounts, resulting in drivers purportedly shelling out more than $10 million in fees to Branch for immediate transfers of their incomes into their chosen accounts.
The accusations are linked to the Spark Driver Program run by Walmart, headquartered in Bentonville, Arkansas, wherein gig economy workers enlisted to carry out “last-mile” deliveries from Walmart outlets nationwide. Branch, on the other hand, is a financial technology firm offering deposit accounts at Evolve Bank & Trust.
In a separate legal development, the CFPB previously filed a lawsuit in May against SoLo Funds, another partner of Evolve, alleging deceptive practices concerning loan cost disclosures. Meanwhile, the Federal Reserve in June issued an enforcement action against Evolve, based in West Memphis, Arkansas, citing a failure to adequately oversee its fintech partners.