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The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Walmart, accusing the retail giant and its partner, Branch Messenger, of defrauding delivery drivers out of millions of dollars.
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The lawsuit claims that Walmart (WMT+2.58%) coerced gig workers in its Spark Driver program to use expense accounts to receive their pay, misleading them about how quickly they could access their earnings.
The filing claims that Walmart and Branch opened deposit accounts for drivers without their consent, using personal information like Social Security numbers. They then told drivers they had no choice but to use these accounts to get paid.
Despite promises of “instant access” to earnings, many drivers faced delays or were charged with high fees to transfer their money into their regular bank accounts. As a result, drivers were hit with over $10 million in fees, including charges for fund transfers and instant access to pay, over a two-year period starting in 2021. These fees were also subject to daily and monthly transfer limits.
The lawsuit also claims that Branch, which Walmart partners with to handle driver payments, mishandled accounts, ignored error reports, and required drivers to waive their rights to take legal action.
“Companies cannot force workers into getting paid through accounts that drain their earnings with junk fees,” said CFPB Director Rohit Chopra, in a statement.
The lawsuit sheds light on how large companies can use loopholes to exploit vulnerable workers in the gig economy. Walmart and Branch’s alleged actions have drawn criticism and come shortly after the CFPB sued the operator of Zelle, along with Bank of America (BAC+1.12%), JPMorgan Chase (JPM+1.64%), and Wells Fargo (WFC+1.49%), accusing them of failing to protect consumers from widespread fraud on the payment platform.
Walmart did not immediately respond to Quartz’s request for comment.
The retailer is considered to be the leading private sector employer. It launched the “Spark Driver” delivery program in 2018. The gig economy-based delivery service hires independent contractors (drivers) to deliver groceries and other products from Walmart stores to customers’ homes. Drivers in the program can choose when and where they work, similar to jobs like Uber (UBER-0.26%) or Doordash (DASH+1.10%). Workers are paid per delivery and can also earn tips.
