CFPB Sues Walmart, Branch Messenger Over Illegal Deposit Accounts

Legal challenges are never easy to confront, and this time, we have Walmart at the center of some serious allegations. The CFPB is suing Walmart and fintech company Branch Messenger for allegedly creating deposit accounts for delivery drivers and forcing them to use it to access their paychecks.

According to the Consumer Financial Protection Bureau’s explanation of the lawsuit on the illegal deposit accounts, the two companies forced millions of delivery drivers to use costly deposit accounts to get paid their wages. The pair were also accused of deceiving these workers on how they could access their earnings. Workers who refused the use of these accounts were faced with threats of termination, which left them with no choice but to comply. 

Image: Walmart

CFPB Sues Walmart and Branch Messenger Over Allegations of Illegally Opening Deposit Accounts for Drivers

In order to explain the CFPB-Walmart lawsuit, we have to start with the workers who have faced the brunt of the allegedly unfair treatment. Walmart’s Spark Driver program is a part of the company’s initiative to deliver groceries to customers at home, and since its launch, its roster of “last mile” delivery drivers—essentially gig workers who take on the task of fulfilling online orders—has grown significantly. 

According to the company, “Spark Driver app operates in all 50 U.S. states across more than 17,000 pickup points,” which means there is a vast network of workers who aid Walmart in making deliveries and returns. These drivers earn an amount for each offer completed, with their earnings including trip feeds, tips, and incentives.

CFPB-Walmart Lawsuit Explained

According to the CFPB’s allegations, for approximately two years since 2021, Walmart and Branch Messenger violated federal law by opening up deposit Branch accounts for their Spark Drivers without their permission. They did so by using the drivers’ personal information, including their Social Security numbers, without authorization from the drivers.

Drivers were expected to use these accounts to receive pay and had to agree to Branch’s terms and conditions. A refusal to do so could lead to termination. The wages were directly deposited into these accounts and the drivers were expected to use the Branch service to access their pay, which made it harder for them to use their money immediately with ease.

Apart from creating the delivery driver accounts, the lawsuit also alleges that the two companies misled the workers about the availability of same-day access to these deposits. The drivers were required to follow an elaborate collection of steps to access their funds and then faced additional delays in transferring that money to an account of their choice from which they might pay their bills or make their own purchases. 

Not only was this transfer process complex, but the CFPB believes that workers collectively paid more than $10 million in junk fees to make the transfers. Many of these drivers are low-wage earners who live paycheck to paycheck, so any delays in receiving their wages or the threat of additional and unnecessary fees can seriously impact their quality of life.

Action Planned in the Lawsuit over Illegal Deposit Accounts 

CFPB is suing Walmart and Branch Messenger under its authority to take action under the Consumer Financial Protection Act, and Branch was also accused of violating the Truth in Savings Act and the Electronic Fund Transfer Act (EFTA). The agency seeks to put an end to the two companies’ “unlawful conduct,” and provide compensation to the affected drivers by imposing a civil money penalty that will be paid into the CFPB’s victims’ relief fund. 

“Walmart made false promises, illegally opened accounts, and took advantage of more than a million delivery drivers,” CFPB Director Rohit Chopra said in a statement. “Companies cannot force workers into getting paid through accounts that drain their earnings with junk fees.”

Walmart and Branch Messenger Respond to the Allegations

Walmart has denied all the claims presented by the CFPB, opting to defend itself in court against the lawsuit. Both the company and Branch are of the belief that the allegations inaccurately represent the situation and that the investigation was conducted in a rushed manner. 

“The CFPB’s rushed lawsuit is riddled with factual errors and contains exaggerations and blatant misstatements of settled principles of law,” Walmart said in a statement. “The CFPB never allowed Walmart a fair opportunity to present its case during their rushed investigation. We look forward to vigorously defending the Company before a court that, unlike the CFPB, honors the due process of law.”

Branch has also denied the allegations, stating that despite its attempts to cooperate with the initial investigations, the CFPB has refused to “engage with Branch in any meaningful way about the matter.” The fintech company also stated that the CFPB has rushed to file the lawsuit for media attention and not with the intention of protecting workers. 

Despite gig work becoming a primary way of earning a living across the country, regulations and guidelines surrounding this form of work have been slow to come. All parties in the lawsuit are determined to hold their ground, so the unfolding of this case may set a precedent for future conflicts over work and wages.

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