The Consumer Financial Protection Bureau (CFPB) has initiated legal action against retail behemoth Walmart and financial technology firm Branch Messenger. The lawsuit alleges that these companies pressured delivery drivers into utilizing expensive deposit accounts for their compensation. The complaint, filed by the consumer watchdog, asserts that Walmart and Branch Messenger violated federal law for a duration of nearly two years beginning in 2021 by creating Branch Messenger accounts for new last-mile drivers without obtaining their consent.
Unbeknownst to the drivers, their earnings were deposited into these accounts without their authorization, and they were compelled to use these accounts under the threat of termination. According to the CFPB, drivers associated with Walmart's Spark Driver program paid over $10 million in unnecessary fees to Branch Messenger simply to transfer their wages instantly to their preferred bank accounts.
Rohit Chopra, director of the CFPB, remarked, '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.' The CFPB further accused the companies of misleading drivers regarding the availability of same-day access to their earnings.
Furthermore, it claimed that Branch Messenger engaged in multiple illegal practices concerning consumer accounts, including neglecting to address reported errors. In response to the lawsuit, a Walmart spokesperson stated to MT Newswires: '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 hurried investigation.' The spokesperson emphasized the company's commitment to defending itself in court. Branch Messenger has yet to respond to MT Newswires' request for comments. Following the news, Walmart's shares saw a decline of 2.3% during late afternoon trading on Monday.
Notably, the stock has experienced a near 72% increase year-to-date. Last month, Walmart had raised its full-year outlook after exceeding expectations with its fiscal third-quarter results, which showcased growth across all its business segments. The CFPB also recently took legal action against JPMorgan Chase, Bank of America, and Wells Fargo, alleging their failure to safeguard consumers against widespread fraudulent activities on the Zelle payments network..