Walmart illegally opened bank accounts for over 1 million drivers, CFPB claims

New York
CNN
—

The Consumer Financial Protection Bureau sued Walmart and fintech company Branch Messenger for allegedly forcing more than a million delivery workers to use expensive savings accounts to access their paychecks, the agency announced Monday.

The companies opened escrow accounts for Walmart drivers with their personal information, such as social security numbers, without authorization, according to the agency’s complaint. Walmart’s Spark Drivers, which the company classifies as independent contractors who bring packages from company warehouses to customers’ doorsteps, could only have their wages deposited into branch accounts, the complaint said. Since 2021, Walmart told workers they could lose their jobs for not using the accounts, according to the lawsuit.

Accessing their earnings took a “complex process” that sometimes led to “weeks-long” delays, the lawsuit said, despite assurances that they would have immediate access to their wages.

And drivers paid a total of $10 million in “junk fees” to transfer those wages to other bank accounts, the CFPB alleges.

“Companies cannot force workers to be paid through accounts that drain their earnings of unwanted fees,” CFPB Director Rohit Chopra said in a statement.

The lawsuit described the typical Spark Driver as “a woman, has children, does not have a college degree and has a low income.”

Walmart denied the CFPB’s allegations and said it would defend itself in court.

“The CFPB’s hasty litigation is riddled with factual errors and contains exaggerations and flagrant misstatements of settled legal principles,” the company said in a statement Monday. “The CFPB never gave Walmart a reasonable opportunity to present its case during their expedited investigation. We look forward to vigorously defending the company in a court that, unlike the CFPB, respects due process of law.”

In addition, the CFPB accused Branch of misleading advertising and failure to investigate and resolve errors, among other allegations. Branch also denied the allegations in the lawsuit, saying it provides “quick and easy access to funds.”

“Despite the company’s extensive cooperation with its investigation, the CFPB refused to engage with Branch in any meaningful way on this matter, instead rushing to file a lawsuit,” the company said in a statement Monday, alleging that the lawsuit is more about “media attention” and “has nothing to do with the law or protection of workers.”

The lawsuit joins the growing chorus for more protections and official classifications for gig workers who have freelance jobs through apps like Uber, Lyft and Doordash. Earlier this month, the CFPB under the Biden administration sued JPMorgan Chase, Bank of America and Wells Fargo for allegedly failing to prevent fraud on money-sending app Zelle.

President-elect Donald Trump is expected to choose a new CFPB director. It’s unclear what that means for this case, but “a lot will depend on who Trump picks as CFPB director,” Jaret Seiberg, fiscal policy analyst at TD Cowen Washington Research Group, previously told CNN in an email.

CNN’s Jeanne Sahadi contributed to this report.