The Consumer Financial Protection Bureau filed a lawsuit against Walmart and the fintech firm Branch Messenger, accusing them of illegally opening deposit accounts for more than one million delivery drivers without their consent. In a complaint filed Thursday, the CFPB said this practice forced drivers to use expensive deposit accounts to access their earnings. ,
Complaints Against Walmart and Branch Messenger
The CFPB alleges that the Spark Drivers of Walmart-independent contractors delivering goods to customers-were forced to receive their payments through accounts created in their name by Branch Messenger using their personal information, including Social Security numbers, without their consent. The drivers were allegedly threatened, since 2021, that they would lose their jobs if they did not use these accounts.
The process for the drivers to get paid was cumbersome and, despite promises of instant payment, would generally take weeks. The CFPB also alleges that drivers paid a total of $10 million in fees to transfer cash from the Branch accounts to the bank accounts of their choice. These so-called “junk fees” have formed one of the central planks of the lawsuit.
Defense and Response by Walmart
In response to the complaint, Walmart denied all the allegations by the CFPB, referring to the lawsuit as “inaccurate and premature.” It made clear it intends to fight the case in court while lambasting the CFPB for what it termed a defective investigation.
The CFPB’s rush-to-judgment lawsuit is riddled with factual errors and full of exaggerations,” a Walmart Spokesperson said. The retail giant added confidently that it was ready to defend itself in a court of law.
Meanwhile, the allegations have also been denied by Branch Messenger, adding it cooperated with the investigation by the CFPB. The Fintech firm argued the lawsuit is about securing headlines rather than about legal issues or taking care of workers.
Broader Implications for Gig Workers
This case reveals a growing concern regarding the treatment of gig workers, including app-based freelancers from platforms such as Uber, Lyft, and DoorDash. For a while now, advocates have been clamoring for clearer protections and fairer classifications of such workers, many of whose incomes have become increasingly unpredictable, with limited benefits.
The CFPB has been very aggressive in the pursuit of gig workers’ cases, having filed recent lawsuits against major financial institutions like JPMorgan Chase, Bank of America, and Wells Fargo over issues related to fraud prevention on digital payment platforms like Zelle.
The case has the potential to set a legal precedent in the payment and protection of gig workers as the labor market continues to evolve. As discussions on worker classification and their rights go on, this case only adds fuel to the debate over what corporations are responsible for when it comes to their freelance workforce.
Both Walmart and Branch Messenger have said that they will fight the charges aggressively and leave the judgment to the courts. If nothing else, at a minimum, for now, these allegations bring to light numerous financial and operational challenges throughout many gig industries.
