Financial Watchdog Takes Aim at Walmart and Branch Messenger Over Excessive Fees
The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against retail giant Walmart and workforce payments provider Branch Messenger, accusing them of charging Spark delivery drivers over $10 million in unnecessary fees. At the heart of the issue is Walmart’s requirement that its independently contracted Spark drivers use Branch’s deposit accounts to access their payments.
Forced Account Openings and Junk Fees
According to the CFPB, thousands of drivers had their wages deposited into a Branch account without their consent. When drivers attempted to transfer money from the Branch account to a different account, they faced significant delays or fees. The complaint alleges that these “junk fees” added up to more than $10 million in extra costs for the drivers. Drivers were forced to choose between paying a 2% or $2.99 transfer fee for instant access to their funds or waiting up to five days for a fee-free transfer, which was only available if the receiving account was with a bank partnered with Branch’s financial data transfer company.
Lack of Payment Options and Misrepresentation
Spark delivery workers have long complained about the limited payment options, which do not allow for direct deposit to a preferred credit union or local bank. The CFPB alleges that Walmart and Branch opened Branch accounts for over 1 million drivers without obtaining their consent, using their personal information, including social security numbers. The defendants also misrepresented the payment terms, claiming that drivers had instant access to their earnings or same-day pay via the Branch account, which was not the case.
CFPB Director Speaks Out
“Walmart made false promises, illegally opened accounts, and took advantage of more than a million delivery drivers,” said CFPB Director Rohit Chopra. “Companies cannot force workers into getting paid through accounts that drain their earnings with junk fees.”
Defendants Deny Allegations
Both Walmart and Branch have denied the accusations, calling the lawsuit “riddled with factual errors” and “exaggerations.” They claim that the CFPB did not provide a fair opportunity to present their case during the investigation.
CFPB Seeks Relief for Harmed Consumers
The CFPB is seeking to end the conduct in question, return funds to harmed consumers, and impose fines to be paid into the CFPB’s victim relief fund. This lawsuit comes on the heels of another suit filed against major banks for failing to protect consumers from fraud on the Zelle platform.
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