Walmart, Branch accused of opening drivers' costly accounts without consent

Walmart and Branch Messenger are being sued for allegedly opening expensive bank accounts for delivery drivers without their consent. Here's all that happened

Walmart Inc and Branch Messenger Inc are facing a lawsuit from the Consumer Financial Protection Bureau (CFPB) over allegations of opening expensive bank accounts for delivery drivers without their consent, according to a report by Bloomberg.

 

The lawsuit, filed in a Minnesota federal court, accuses the companies of misleading practices and exploiting drivers in Walmart’s Spark Driver programme.

 

What is Walmart’s Spark Driver programme?

Launched in 2018, Walmart’s Spark delivery service uses third-party drivers to deliver online orders. The programme plays a crucial role in Walmart’s e-commerce operations, which saw over 20 per cent growth in United States sales during the most recent quarter.

 

The Spark Driver app allows drivers to make deliveries and returns for Walmart and other retailers. The app offers drivers the flexibility to choose when and where they want to work. As independent contractors in the gig economy, drivers can earn money by completing delivery offers, shopping, and making returns. Earnings come from trip payments, tips, and additional incentives.

 

Drivers can receive their earnings via a linked bank account or a digital wallet. Digital wallets are offered by third-party providers, subject to their own terms and privacy policies, the website says.

 

Branch Messenger is not mentioned on the Spark delivery app page.

 

What are the allegations against Walmart and Branch Messenger?

US crime bureau CFPB claims Walmart and Branch Messenger required drivers in the Spark programme to be paid through accounts provided by Branch Messenger or face termination. These accounts reportedly incurred high fees, and many drivers struggled to access their earnings.

 

CFPB Director Rohit Chopra stated, “Walmart made false promises, illegally opened accounts, and took advantage of more than a million delivery drivers.”

 

According to the CFPB, the drivers were promised instant access to their pay, but in reality, the process was convoluted, often resulting in weeks of delays.

 

Fees and delays: Drivers were charged a fee of either 2 per cent of the transfer amount or $2.99 (whichever was higher) for immediate access to their earnings. A no-fee option was available but took up to five days, and many drivers were reportedly unaware of it.

 

Account limits: Drivers faced daily and monthly limits on transferring funds, further restricting access to their money.

 

Walmart and Branch Messenger’s defence

Walmart, headquartered in Bentonville, Arkansas, has denied the allegations, calling the CFPB’s complaint “riddled with factual errors.” The company also criticised the agency’s “rushed investigation” and vowed to defend itself in court.

 

Branch Messenger, which provides fintech services, also disagreed with the lawsuit. A spokesperson stated that the company “stands behind its model and services and will defend this action vigorously.”