Spark-Driver

CFPB Accuses Walmart of Exploiting Spark Drivers with Unauthorized Accounts

 

US watchdog, the Consumer Financial Protection Bureau (CFPB) has sued Walmart Inc. and Branch Messenger Inc., alleging that the two companies opened unauthorized bank accounts for over a million delivery drivers without their knowledge and charged them unfair fees.

 

Unauthorized Account Opening Allegations

 

In a lawsuit filed at the US District Court for the District of Minnesota, the CFPB alleges that since June of 2021, Walmart forced drivers in its Spark Driver program to accept payments through accounts offered by Branch Messenger. These accounts were reportedly opened without the drivers’ knowledge or consent and the company used their social security numbers. The CFPB claims that drivers were told that they would lose their jobs if they did not use these accounts.

 

Misleading Promises and Imposed Fees

 

Drivers were also misled as to whether or how they could access the earnings they made, the CFPB alleges. Drivers were just offered immediate access to pay but hit delays and roadblocks when trying to access their funds. Meanwhile, some drivers were not able to access their money at all.

But immediate fund transfers to anyone who could use the accounts carried an additional fee (2% of the amount transferred, or $2.99, whichever was greater). Details of the transfer were negotiated between drivers and lenders at the outset of the delinquency period, and the CFPB says few drivers were informed that transfers were, at least in theory, available. Drivers also had limits imposed on how much they could transfer daily or monthly. 

 

Responses from Walmart and Branch Messenger

 

Walmart has refused the allegations, saying the CFPB’s investigation was “rushed” and the complaint “riddled with factual errors.” A Walmart spokesperson said the company will fight in court. 

The claims were repudiated by Branch Messenger as well, which claimed that the company "stands behind its model and services and will defend this action vigorously." The Branch criticized the refusal to engage meaningfully during the investigation and for rushing to file the suit. 

 

CFPB's Stance and Legal Actions

 

CFPB Director Rohit Chopra stated, "Walmart made false promises, illegally opened accounts, and took advantage of more than a million delivery drivers." The CFPB is seeking to halt the alleged unlawful conduct and obtain redress for harmed consumers, and civil penalties to be paid for the CFPB's victims' relief fund. 

 

The Implications for Gig Economy Workers

 

The gig economy lawsuit is representative of ongoing worries about how gig economy workers are being treated, particularly regarding paying and fees. This case could have large ramifications for future gig economy worker compensation regulation more generally as well as for companies utilizing similar payment models.