Walmart illegally opened costly deposit accounts for one million delivery drivers, lawsuit claims
More than one million delivery drivers collectively paid more than $10 million in fees after Walmart and Branch Messenger illegally opened costly deposit accounts in their names without consent, the Consumer Financial Protection Bureau alleges in a lawsuit filed Monday against the retailer and payments platform.
The federal agency claims drivers were forced to use the accounts to get paid and were deceived about how to access their earnings, with Walmart threatening to fire workers who did not comply. Drivers had to follow a complicated process to get their pay, and then faced further delays or fees if they needed to transfer the money into another account.
As a result, workers forked over more than $10 million in fees to transfer their earnings into accounts of their choosing, the CFPB claims.
"Walmart made false promises, illegally opened accounts and took advantage of more than a million delivery drivers," CFPB Director Rohit Chopra said in a news release. "Companies cannot force workers into getting paid through accounts that drain their earnings with junk fees."
Both Walmart and Branch vowed a vigorous defense.
"The CFPB's rushed lawsuit is riddled with factual errors and contains exaggerations and blatant misstatements of settled principles of law. The CFPB never allowed Walmart a fair opportunity to present its case during their rushed investigation," the retailing giant said in a statement emailed to CBS MoneyWatch.
Branch echoed Walmart's stance, accusing the CFPB of misstating "the law and facts." The CFPB's suit "includes intentional omissions" to cover what the company called the bureau's "overreach, it said in an email.
"Branch has provided Walmart and their driver partners valuable services allowing quick and easy access to funds via their business accounts — a key fact the bureau's press release omits," it said.
The CFPB alleges in its suit that the two firms violated federal law for two years starting in 2021. The company and Branch are accused of using drivers' information, including their Social Security numbers, to open accounts without permission. Drivers' pay was then deposited into the accounts without their authorization, resulting in drivers paying more than $10 million in fees to Branch to instantly transfer their earnings into accounts of their choosing, the agency alleges.
The allegations involved the Spark Driver Program operated by Bentonville, Arkansas-based Walmart in which gig economy workers signed up to make "last-mile" deliveries from Walmart stores nationwide. Branch is a financial technology company that offers deposit accounts at Evolve Bank & Trust.
The CFPB in May filed a lawsuit against SoLo Funds, another of Evolve's partners, accusing it of deceiving borrowers about the total costs of loans. The Federal Reserve in June issued an enforcement action against West Memphis, Arkansas-based Evolve, finding it failed to properly police its fintech partners.
