The U.S. Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Walmart and its fintech partner, Branch Messenger, alleging that the companies engaged in deceptive practices and exploited delivery drivers by requiring them to use specific bank accounts to receive their earnings.
The lawsuit contends that Walmart mandated drivers in its Spark delivery program to use accounts provided by Branch Messenger, which partners with Evolve Bank & Trust to offer these accounts and debit card services. Drivers were allegedly presented with this arrangement as a mandatory condition of employment, leaving them with little choice but to comply.
The CFPB alleges that drivers were misled regarding access to their earnings. While advertised as offering immediate access to pay, drivers often encountered significant delays and difficulties in withdrawing their funds. In some instances, drivers were unable to access their earned wages at all.
Furthermore, the lawsuit alleges that drivers faced exorbitant fees for accessing their funds. Immediate fund transfers incurred fees of either 2% of the transferred amount or $2.99, whichever was higher. A no-cost transfer option was available, but it required a waiting period of up to five days, a fact that the CFPB claims was not adequately communicated to drivers.
This lawsuit follows a series of recent enforcement actions by the CFPB, including a lawsuit against major U.S. banks over Zelle fraud issues and the implementation of a cap on overdraft fees. These actions underscore the CFPB’s commitment to protecting consumers and ensuring fair financial practices across the financial services industry.
The allegations against Walmart and Branch Messenger raise serious concerns about the exploitation of workers and the potential for predatory financial practices within the gig economy. This lawsuit will likely have significant implications for the future of on-demand delivery services and the use of fintech solutions in the workplace.