The Consumer Financial Protection Board sued Walmart and a financial services firm on Monday for allegedly requiring delivery drivers to use an app that charged them fees to access their own earnings.
The CFPB said the drivers worked on Walmart’s gig platform known as Spark, in which independent contractors deliver store orders to customers’ homes out of their personal vehicles. Like Instacart and DoorDash, Walmart markets the platform as a way to “shop, deliver and earn” while working “as your own business” through its driver app.
Walmart and the financial services firm, Branch Messenger, opened accounts for drivers and deposited their earnings into them “without the drivers’ consent,” the CFPB alleged. Workers collectively paid millions of dollars in “junk fees” in order to move that money into their own bank accounts, according to the lawsuit.
CFPB Director Rohit Chopra told HuffPost the costs to drivers were “substantial.”
“Walmart told workers they would have same-day access to their earnings,” Chopra said. “Drivers actually in many cases had to pay fees to transfer their money to an actual bank account.”
He added, “We shouldn’t have a situation where companies are forcing people into accounts that are then drained with these fees.”
“We shouldn’t have a situation where companies are forcing people into accounts that are then drained with these fees.”
– Rohit Chopra, CFPB director
Branch Messenger accused the CFPB of “overreach” and said the lawsuit “misstates the law and facts.”
“Despite the company’s extensive cooperation with its investigation, the CFPB refused to engage with Branch in any meaningful way about this matter, instead rushing to file a lawsuit,” the company said in a statement. “This approach makes clear that this litigation has nothing to do with the law or protecting workers and everything to do with the media attention garnered by a lawsuit involving one of the world’s biggest retailers.”
Walmart said the lawsuit was “riddled with factual errors.”
“The CFPB never allowed Walmart a fair opportunity to present its case during their rushed investigation,” a spokesperson said in an email.
The CFPB is responsible for protecting consumers from exploitative practices by banks and other financial institutions. The agency said that Walmart and Branch Messenger violated the Consumer Financial Protection Act as well as the Electronic Funds Transfer Act.
“Employers are not allowed to force you to get your salary in a particular account,” Chopra said.
The CFPB alleged that Walmart hired a third-party administrator to oversee the delivery program and that the administrator took on Branch Messenger as its “exclusive” payment provider for Spark drivers in 2021.
Many drivers “did not understand the terms and conditions of the Branch Account — or even what type of account they were being provided,” the lawsuit states. The administrator provided Branch Messenger with drivers’ personal information, including social security numbers, in order to set up the accounts, according to the suit.
After performing work, drivers were allegedly “forced to accept” the terms and conditions of the Branch Messenger account in order to get their money. Only later, in 2022, did Walmart provide “limited information” about the requirement to use a Branch account for payment, the lawsuit states.
Drivers who wanted to get their money out of the Branch Messenger account immediately had to pay a 2% transfer fee, according to the CFPB. Drivers could also link a separate bank account to the app, but such transfers could take up to five days to clear, and not all banks were eligible for them.
The agency said those fees amounted to more than $10 million over the period covered in the lawsuit.
