The Consumer Financial Protection Bureau has filed a lawsuit against Walmart and fintech company Branch Messenger for allegedly compelling over a million delivery workers to use costly deposit accounts to access their paychecks. The agency claims that the companies opened deposit accounts for Walmart's drivers without authorization, using their personal information like Social Security numbers. These drivers, known as Spark Drivers, were classified as independent contractors by Walmart and were required to have their pay deposited exclusively into the Branch accounts. Failure to comply could result in job loss, as per the lawsuit.
The lawsuit further alleges that accessing their earnings through these accounts involved a complex process, leading to significant delays, despite promises of instant access. Additionally, drivers reportedly paid a total of $10 million in fees to transfer their wages to other bank accounts, which the CFPB deems as 'junk fees.'
CFPB Director Rohit Chopra emphasized that companies should not force workers into accounts that deplete their earnings with excessive fees. The lawsuit highlighted the typical Spark Driver as a woman with children, lacking a college degree, and falling into the low-income bracket.
While Walmart has denied the claims and vowed to defend itself in court, Branch Messenger has also refuted the allegations of misleading advertising and failure to address errors. Branch Messenger stated that it offers quick and easy access to funds and criticized the CFPB for not engaging meaningfully with them before filing the lawsuit.
This legal action adds to the growing demand for enhanced protections and official classifications for gig workers, particularly those engaged in freelance jobs through platforms like Uber, Lyft, and Doordash. Earlier this month, the CFPB, under the Biden administration, sued major banks for allegedly failing to prevent fraud on the money-sending app Zelle.
With the impending selection of a new CFPB director by President-elect Donald Trump, the outcome of this case remains uncertain. Financial services policy analysts suggest that the choice of the new director will significantly impact the proceedings of this lawsuit.
