Walmart and Branch Messenger Sued Over Driver Fees
The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Walmart and Branch Messenger, a workforce payments company. The lawsuit, announced on Monday, alleges that the two companies forced delivery drivers to use specific bank accounts, leading to over $10 million in junk fees. This case centers around Walmart’s Spark Driver program, which employs gig workers for deliveries. The CFPB claims that these practices misled drivers about their payment options and access to earnings.
Allegations of Coercion and Misleading Practices
The CFPB’s lawsuit accuses Walmart of coercing drivers in its Spark Driver program to open and use Branch accounts for their pay. According to the CFPB, Walmart and Branch opened accounts for drivers without their consent, depositing their earnings directly into these accounts. The lawsuit states that Walmart threatened drivers with termination if they did not comply with this requirement.
CFPB Director Rohit Chopra emphasized the seriousness of these allegations, stating, “Today, the CFPB sued Walmart Inc. and Branch Messenger, Inc. for forcing gig economy drivers to use costly and risky accounts to get paid and for deceiving workers about how they could access their earnings.” The lawsuit aims to hold both companies accountable for their actions and seeks to stop these practices while compensating affected drivers.
The Spark Driver program operates nationally, utilizing gig workers for deliveries. Branch Messenger, a financial technology firm, provides a digital bank account through Evolve Bank & Trust. The CFPB’s lawsuit marks a significant move against practices that it deems harmful to workers in the gig economy.
Financial Impact on Drivers
The lawsuit highlights the financial burden placed on drivers due to misleading payment practices. The CFPB alleges that Walmart and Branch misled drivers about how quickly they could access their earnings. This resulted in drivers incurring over $10 million in fees when transferring money to their preferred accounts.
Chopra stated, “Walmart made false promises, illegally opened accounts, and took advantage of more than a million delivery drivers.” The CFPB argues that companies should not force workers into using accounts that deplete their earnings through excessive fees. The lawsuit seeks to rectify these issues and provide relief to the affected drivers.
The CFPB’s investigation revealed that these practices had been ongoing for approximately two years, starting in 2021. The agency aims to halt these practices, compensate the drivers impacted, and impose a financial penalty on the companies involved. This penalty would contribute to the CFPB’s victim relief fund, which assists those harmed by unfair financial practices.
Responses from Walmart and Branch Messenger
In response to the allegations, both Walmart and Branch Messenger have denied any wrongdoing. They claim that the CFPB did not provide them with adequate time to respond before filing the lawsuit. Walmart expressed its intention to defend itself vigorously in court. The company stated, “We look forward to vigorously defending the company before a court that, unlike the CFPB, honors the due process of law.”
This lawsuit is part of a broader initiative by the CFPB to enhance worker protections. The agency has previously issued guidance on various issues, including background checks and employer-driven debt. This case marks the CFPB’s first action against a fintech partner of Evolve Bank & Trust related to deposit accounts. The Federal Reserve has also taken action against Evolve Bank & Trust for failing to oversee its fintech partners adequately.
As the lawsuit unfolds, it will be crucial to observe how it impacts the gig economy and the practices of companies like Walmart and Branch Messenger. The outcome may set a precedent for how gig workers are treated and compensated in the future.
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