Walmart accused of illegally opening bank accounts for 1m drivers

Walmart denies CFPB’s claims, vows to defend itself in court against alleged illegal account practices.

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The Consumer Financial Protection Bureau (CFPB) filed a lawsuit against Walmart and fintech company Branch Messenger, accusing the companies of forcing over a million delivery workers to use expensive deposit accounts to access their paychecks.

According to the CFPB’s complaint, Walmart and Branch opened deposit accounts for Walmart’s Spark Drivers, who are classified as independent contractors, using their personal information, including Social Security numbers, without authorization.

The lawsuit claims that Walmart’s drivers, who transport packages from the company’s warehouses to customers, could only have their pay deposited into these Branch accounts. Since 2021, Walmart allegedly told workers that failure to use these accounts could result in job loss.

The lawsuit also stated that accessing earnings through the accounts was a "complex process," often leading to delays of several weeks, despite the company’s assurances of instant access to pay. Additionally, drivers reportedly paid a combined total of $10 million in "junk fees" to transfer their wages to other bank accounts, the CFPB said.

CFPB Director Rohit Chopra condemned the practice, stating, “Companies cannot force workers into getting paid through accounts that drain their earnings with junk fees.”

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

Walmart denied the CFPB’s allegations, stating it would vigorously defend itself in court. In a statement, Walmart said, “The CFPB’s rushed lawsuit is riddled with factual errors and contains exaggerations and blatant misstatements of settled principles of law. The CFPB never allowed Walmart a fair opportunity to present its case during their rushed investigation. We look forward to vigorously defending the Company before a court that, unlike the CFPB, honors the due process of law.”

CFPB also accused Branch of misleading advertising and failing to investigate and resolve errors related to the accounts. Branch, however, denied the claims, defending its services by stating, “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.”

Branch further claimed that the lawsuit was driven by a desire for “media attention” rather than concerns for worker protections.

This lawsuit is part of a broader push for increased protections for gig workers, who are classified as independent contractors for companies like Uber, Lyft, and DoorDash.

Earlier this month, the CFPB also filed lawsuits against major banks including JPMorgan Chase, Bank of America, and Wells Fargo for allegedly failing to prevent fraud on the money-sending app Zelle.

The outcome of this case could be influenced by the selection of a new CFPB director, as President-elect Donald Trump is expected to appoint a replacement. Jaret Seiberg, a financial services policy analyst at TD Cowen Washington Research Group, noted that the future direction of the case would depend on the new director’s approach to such issues.