Dive Brief:
- The Consumer Financial Protection Bureau is suing Walmart and financial technology firm Branch Messenger, alleging they forced the retailer’s delivery drivers to use specific deposit accounts to get paid and misled the workers with respect to how they could access their earnings, according to a Dec. 23, 2024 press release.
- The CFPB claims this led to workers paying more than $10 million in fees to transfer their earnings to an account of their choice.
- In an emailed statement, Walmart said the CFPB “rushed” its investigation on the retailer’s activities, and that it will fight the lawsuit in court.
Dive Insight:
The retailer told its drivers that they were required to use Branch to get paid and that they would be terminated if they did not want to use these accounts, according to the CFPB’s lawsuit.
The lawsuit also alleges that Walmart deceived workers regarding the availability of same-day access to their earnings and made drivers follow a complex process to access their funds, leading them to pay what CFPB Director Rohit Chopra called “junk fees.”
“Walmart made false promises, illegally opened accounts, and took advantage of more than a million delivery drivers,” Chopra said. “Companies cannot force workers into getting paid through accounts that drain their earnings with junk fees.”
The CFPB’s lawsuit against Walmart and Branch contends the two companies violated federal law for approximately two years starting in 2021.
Branch also offers a deposit account at Evolve Bank & Trust that customers can access through the company’s digital app and debit card.
The CFPB also alleges Branch engaged in illegal activities related to consumer accounts, including illegally requiring consumers to waive their legal rights and failing to: investigate alleged errors; honor stop payment requests; and maintain necessary records.
Walmart pushed back on the CFPB’s allegations.
“The CFPB’s rushed lawsuit is riddled with factual errors and contains exaggerations and blatant misstatements of settled principles of law,” a Walmart spokesperson said in an emailed statement on Thursday. “The CFPB never allowed Walmart a fair opportunity to present its case.”
In a separate email, Branch claimed the CFPB’s lawsuit “misstates the laws and facts,” in addition to including “intentional omissions to mask the Bureau’s clear overreach.”
“Despite the company’s extensive cooperation with its investigation, the CFPB refused to engage with Branch in any meaningful way about this matter, instead rushing to file a lawsuit,” a Branch spokesperson said by email. “This approach makes clear that this litigation has nothing to do with the law or protecting workers and everything to do with the media attention garnered by a lawsuit involving one of the world’s biggest retailers.”
