Walmart illegally opened high-cost escrow accounts for a million delivery drivers, lawsuit alleges

More than a million delivery drivers collectively paid more than $10 million in fees after Walmart and Branch Messenger illegally opened high-priced savings accounts in their names without consent, the Consumer Financial Protection Bureau alleges in a lawsuit filed Monday against the retailer and payment platform.

The federal agency claims drivers were forced to use accounts to get paid and were deceived about how to access their earnings, with Walmart threatening to fire workers who didn’t comply. Drivers had to follow a complicated process to get their pay and then faced further delays or fees if they had to transfer the money to another account.

As a result, workers paid more than $10 million in fees to transfer their earnings to accounts of their choosing, the CFPB alleges.

“Walmart made false promises, illegally opened accounts and exploited more than one million delivery drivers,” CFPB Director Rohit Chopra said in a news release release. “Companies cannot force workers to be paid through accounts that drain their earnings with junk fees.”

Both Walmart and Branch pledged a vigorous defense.

“The CFPB’s expedited filing is riddled with factual errors and contains exaggerations and flagrant misstatements of settled legal principles. The CFPB never gave Walmart a reasonable opportunity to present its case during their expedited investigation,” the retail giant said in a statement sent to CBS MoneyWatch.

Branch echoed Walmart’s position, accusing the CFPB of misrepresenting “the law and the facts.” The CFPB’s case “includes intentional omissions” to cover up what the company called the agency’s “overreach,” it said in an email.

“Branch has provided Walmart and their driver partners with valuable services that provide quick and easy access to funds through their corporate accounts — an important fact that the agency’s press release omits,” it said.

The CFPB alleges in its lawsuit that the two firms violated federal law for two years starting in 2021. The company and the branch are accused of using drivers’ information, including their social security numbers, to open accounts without authorization. The drivers’ wages were then deposited into accounts without their permission, resulting in drivers paying more than $10 million in fees to Branch to instantly transfer their earnings to accounts of their choosing, the agency alleges.

The allegations involved the Spark Driver program run by Bentonville, Arkansas-based Walmart, in which gig economy workers signed up to make “last-mile” deliveries from Walmart stores across the country. Branch is a financial technology company that offers deposit accounts with Evolve Bank & Trust.

CFPB in May submitted -one lawsuit against SoLo Funds, another of Evolve’s partners, accusing it of deceiving borrowers about the total cost of loans. The Federal Reserve in June issued an enforcement action against West Memphis, Arkansas-based Evolve, find it failed to properly monitor its fintech partners.