In a significant development revealed on December 23, 2024, the US Consumer Financial Protection Bureau (CFPB) announced that it has initiated legal action against the retail giant Walmart and the financial technology company Branch Messenger. The lawsuit stems from serious allegations that these companies pressured delivery drivers to utilize expensive deposit accounts in order to receive their earnings.
According to the CFPB, the companies are accused of breaching federal law for nearly two years, dating back to 2021, by opening accounts with Branch Messenger for new last-mile drivers without securing their consent. The complaint highlights that drivers' wages were deposited into these accounts without authorization, with the condition that they must use these accounts or risk being terminated from their roles.
The financial impact of this practice has been notable. Drivers enrolled in Walmart's Spark Driver program reportedly paid over $10 million in unnecessary fees to Branch Messenger, aimed at facilitating the instant transfer of their earnings to preferred banking accounts. CFPB Director Rohit Chopra commented on the situation, stating, "Walmart made false promises, illegally opened accounts, and took advantage of more than a million delivery drivers.
Companies cannot force workers into getting paid through accounts that drain their earnings with junk fees." This statement emphasizes the gravity of the accusations leveled against Walmart and Branch Messenger. Further allegations suggest that these companies misled drivers regarding the possibility of accessing their earnings on the same day.
Branch Messenger has also been implicated in allegedly engaging in several illegal practices related to consumer accounts, including a failure to address and investigate reported errors. In response to the lawsuit, a Walmart spokesperson expressed strong disapproval of the CFPB's actions, stating, "The CFPB's rushed lawsuit is riddled with factual errors and contains exaggerations and blatant misstatements of settled principles of law." They criticized the agency for failing to permit Walmart an adequate opportunity to defend its case during the investigation, asserting that the corporation is prepared to contest the charges in court.
On the side of Branch Messenger, the firm has publicly stated, via an email communication on January 2, 2025, that it "strongly disagrees" with the claims made by the CFPB and is committed to mounting a defense. They maintained that the complaint contains inaccuracies regarding both the law and the facts, alleging that it omits crucial details to obscure what they consider as the Bureau's overreach.
Branch Messenger insisted that despite their extensive cooperation during the inquiry, the CFPB filed the lawsuit prematurely without substantial engagement. Additionally, amidst this controversy, Walmart has recently adjusted its full-year outlook positively following unexpectedly strong financial performance in its fiscal third-quarter results, which indicated growth across all business segments.
The broader context of consumer protection has also come into focus, as the CFPB revealed on December 20, 2024, that it has also filed suit against JPMorgan Chase, Bank of America, and Wells Fargo, citing their failure to safeguard consumers from alleged pervasive fraud within the Zelle payments network..