CFPB Sues Walmart and Branch Messenger Over Gig Driver Payment Practices

WASHINGTON, D.C., December 23, 2024 – The Office of Consumer Financial Protection (BPFB) sued Walmart Inc. and Branch Messenger, Inc., accusing ​them ​of misleading and illegal practices ​involving payment methods ​for giant economic drivers in Walmart’s Spark Driver ​program. The prosecution, filed in the Minnesota Federal Court, alleges ​that more than one million delivery drivers were forced to ​use the branch ​accounts, resulting in ​a cost of more than $10 million from 2021 to 2023.

According to the CBPF, ​Walmart and ​Branch Messenger demanded that participants in the Spark Driver program open ​accounts for pay deposits, often without driver consent. The Commission calls ​for drivers to be threatened with dismissal if they refuse to comply. Rohit Chopra, ​director of the PSCB, ​said: “Walmart has made false promises, opened accounts illegally and benefited more than a million delivery drivers. Companies cannot force workers to pay through accounts that exhaust their profits with garbage ​charges

Allegations against Walmart and Branch ​Messenger

The CFPC claim describes several ​claims against Walmart and Branch. Among the ​allegations, the defendants ​allegedly misled the ​drivers by promising immediate access to income. However, many drivers have had to face ​delays or charges ​to transfer their salaries ​to accounts of ​preference. The costs, ranging from a lump sum ​amount of $2.99 to 2% of the amount transferred, have been accumulated to over $10 million for two years.

The ​CFPC further alleges that Walmart and Branch opened accounts using drivers’ personal information, such as social security numbers, without proper authorization. It was also ​reported ​that drivers were subject to restrictive daily and ​monthly transfer limits, which aggravated access problems. In addition, the Branch did not conduct an adequate investigation into account errors, high fee claims ​and maintained the ​required ​records and claims.

The Spark Driver program of Walmart and its controversy

Walmart launched ​its Spark Driver program in 2018 to meet the growing demand for last-minute services. Modulated after giant economic platforms like Uber and DoorDash, the program allows drivers to hand over orders to customers home, offering flexible working hours ​and payment compensation for delivery. Despite its popularity, the program has ​been criticized for the rights of workers and the alleged abuse of their personal data.

The Commission states that ​drivers, often low-income women, were particularly vulnerable to the alleged exploitation. ​By ​imposing the use of specific accounts with high fees and imposing complex transfer processes, Walmart and ​Branch ​would have compromised the financial stability of their workforce.

Complaints and legal responses

Walmart and Branch Messenger categorically denied the ​charges. Walmart issued ​a statement describing the allegation ​as ​”victim of factual errors” and criticized the Commission for ​a ​”suspended ​investigation” that deprived the company of a fair ​opportunity to present its arguments. The retailer added: “We hope to vigorously ​defend ​the company in a court that, unlike the PSCB, honours due process.”

Branch ​Messenger also rejected the Commission’s ​allegations, stating that the request was motivated by media attention rather than legal content. “The industry is behind its model and services and will vigorously defend this action,” the company said. Fintech ​highlighted ​its commitment to providing “fast and easy access to ​funds” and challenged allegations of misleading practices and mismanagement accounts.

Consequences for ​Gig workers and Fintech regulations

Demand has wider implications for the alliances of the ​huge financial economy and technology (fintech). According to the CFPB, this case represents its first enforcement action against ​a fintech partner of the Bank and the ​Evolve Trust, who is working with Branch to provide digital accounts. Evove has been the subject of a regulatory review in the past, including measures by the Federal Reserve regarding inadequate monitoring of ​fintech ​partnerships.

The Commission’s legal action is aligned with its recent efforts to strengthen ​worker protection. The Agency also led other important institutions, including ​prosecutions against ​JPMorgan Chase, Bank ​of ​America ​and Wells Fargo, for alleged breaches of consumer protection on platforms ​such as Zelle. These movements reflect growing concerns about the classification and treatment of concert workers, many of whom face unique financial vulnerabilities.

The ​road ahead

The Commission ​seeks financial compensation for the drivers concerned, the ​cessation of the alleged practices and the financial penalties to be paid to the Agency’s ​victims in the ​relief fund. As demand progresses, it highlights the ongoing ​debate on classification of workers, corporate responsibility and the intersection of financial and labour rights.

Since Biden’s administration favours greater monitoring of giant economic practices, the outcome of this case could set a precedent for how companies treat ​workers’ payments in non-traditional ​employment models. Gig workers, defence groups and companies will closely monitor Walmart and Branch practices in ​court.