More than a million delivery drivers collectively paid more than $10 million in fees after Walmart and Branch Messenger illegally opened expensive deposit accounts in their names without consent, the Protection Bureau alleges Consumer Finance in one lawsuit filed on Monday against the retail and payment platform.
The federal agency claims drivers were forced to use the accounts to collect and were misled about how to access their earnings, with Walmart threatening to fire workers who didn’t comply. Drivers had to go through a complicated process to collect their payment and then faced further delays or fees if they had to transfer the money to another account.
As a result, workers paid more than $10 million in fees to transfer their earnings to accounts of their choosing, the CFPB claims.
“Walmart made false promises, illegally opened accounts and took advantage of more than one million delivery drivers,” CFPB Director Rohit Chopra said in a news release. release. “Companies cannot force workers to pay through accounts that eat up their earnings with unwanted fees.”
Both Walmart and Branch promised a vigorous defense.
“The CFPB’s rushed lawsuit is riddled with factual errors and contains gross overstatements and misstatements of established legal principles. The CFPB never allowed Walmart a fair opportunity to present its case during its rushed investigation,” said the retail giant in a statement emailed to CBS. MoneyWatch.
Branch echoed Walmart’s position, accusing the CFPB of misrepresenting “the law and the facts.” The CFPB’s lawsuit “includes intentional omissions” to cover what the company called the bureau’s “overreach,” it said in an email.
“Branch has provided Walmart and its driver partners with valuable services that allow quick and easy access to funds through their merchant accounts, a key fact that the bureau’s press release omits,” he said.
The CFPB alleges in its lawsuit that the two companies violated federal law for two years beginning in 2021. The company and the branch are accused of using drivers’ information, including their Social Security numbers , to open accounts without permission. The drivers’ pay was then deposited into the accounts without their authorization, causing the drivers to pay more than $10 million in fees to Branch to instantly transfer their earnings to accounts of their choosing, the agency said.
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 at Walmart stores nationwide . Branch is a financial technology company that offers deposit accounts at Evolve Bank & Trust.
The CFPB in May archived a lawsuit against SoLo Funds, another of Evolve’s partners, accusing it of misleading borrowers about the total costs of loans. The Federal Reserve issued an enforcement action against West Memphis, Arkansas-based Evolve in June. finding did not adequately monitor its fintech partners.