The Consumer Financial Protection Bureau (CFPB) filed a lawsuit against Walmart and fintech company Branch Messenger for allegedly compelling over a million delivery workers to utilize costly deposit accounts to access their paychecks.
The big picture: The lawsuit alleges that Walmart and Branch Messenger opened unauthorized deposit accounts for Walmart’s drivers, utilizing their personal information such as Social Security numbers.
- These accounts were the only option for depositing the pay of Walmart’s Spark Drivers, who are classified as independent contractors responsible for delivering packages.
Zoom in: According to the complaint, Walmart informed workers that not using the Branch accounts could result in job loss and accessing their earnings involved a complex process, causing significant delays despite promises of instant access to pay.
- The lawsuit claims that the drivers collectively paid $10 million in “junk fees” to transfer their wages into other bank accounts. CFPB Director Rohit Chopra emphasized that companies cannot force workers to use accounts that deplete their earnings with excessive fees.
The other side: In response to the CFPB’s claims, Walmart denied the allegations and vowed to vigorously defend itself in court, accusing the CFPB of factual errors and misstatements of settled legal principles.
- Walmart expressed dissatisfaction with the rushed investigation by CFPB and looked forward to presenting its case in court.
- Additionally, CFPB accused Branch Messenger of misleading advertising and failure to address errors. Branch denied these allegations and highlighted its provision of quick and easy fund access. The company criticized the lawsuit as more about seeking media attention than protecting workers, arguing that it had cooperated extensively with the investigation.
