In December 2024, the Consumer Financial Protection Bureau (CFPB) filed a lawsuit against Walmart Inc. and Branch Messenger, Inc., alleging that the companies engaged in unlawful practices affecting over one million delivery drivers in Walmart’s Spark Driver program.
Allegations Against Walmart and Branch Messenger
The CFPB’s complaint centers on several key allegations:
- Unauthorized Account Creation: Walmart and Branch Messenger purportedly opened deposit accounts for Spark Drivers without obtaining their consent. These accounts were established using drivers’ personal information, including Social Security numbers, without proper authorization.
- Mandatory Use of Branch Accounts: Drivers were allegedly compelled to receive their wages through these unauthorized Branch accounts, with the threat of termination if they refused. This practice effectively removed the drivers’ choice in how they received their earnings.
- Misrepresentation of Instant Access: The lawsuit claims that Walmart and Branch misled drivers by promising “instant access” to their earnings. In reality, drivers encountered complex processes to access their funds, often facing delays or incurring fees to transfer money to their preferred accounts.
- Accumulation of Excessive Fees: Due to the convoluted access procedures, drivers collectively paid over $10 million in fees to transfer their earnings from the Branch accounts to accounts of their choice.
Legal Implications and Violations
The CFPB asserts that these actions constitute violations of several federal laws, including:
- Consumer Financial Protection Act (CFPA): By engaging in unfair, deceptive, and abusive practices, Walmart and Branch allegedly breached the CFPA.
- Electronic Fund Transfer Act (EFTA): Branch Messenger is accused of failing to honor stop payment requests and not conducting reasonable error investigations, thereby violating EFTA regulations.
- Truth in Savings Act (TISA): The misrepresentation of “instant access” to funds is cited as a violation of TISA, as drivers did not receive the immediate access that was promised.
Responses from Walmart and Branch Messenger
Both Walmart and Branch Messenger have publicly denied the allegations. Walmart criticized the CFPB for not providing due process, stating that the agency did not give the company a chance to address the concerns before filing the lawsuit. Branch Messenger also expressed disappointment, asserting that they had cooperated with the CFPB and were blindsided by the litigation.
Impact on Spark Drivers
The Spark Driver program, which utilizes independent contractors to deliver orders from Walmart stores to customers, has been significantly affected by these practices. Drivers reported that the mandatory use of Branch accounts and the associated fees reduced their overall earnings. Many drivers also expressed frustration over the lack of transparency and the difficulties encountered when attempting to access their wages.
Conclusion
The CFPB’s lawsuit against Walmart and Branch Messenger highlights critical issues regarding worker rights and corporate responsibility in the gig economy. As the case progresses, it underscores the importance of transparent and fair payment practices, especially for independent contractors who rely on timely and full compensation for their services.