One of the nation’s largest retailers and a financial technology (fintech) firm were sued Monday for alleged illegal opening of accounts for delivery drivers and the two harvesting more than $10 million in “junk fees,” the federal consumer financial protection agency said.
WalMart of Bentonville, Ark., and Branch Messager of Minneapolis, Minn., were sued by the Consumer Financial Protection Bureau (CFPB) for allegedly forcing delivery drivers to use what it termed costly deposit accounts to get paid and for allegedly deceiving workers about how they could access their earnings. Those workers are known, in the retailer’s parlance, as “last mile” drivers in Walmart’s Spark Driver program.
In the lawsuit, CFPB alleges that Walmart and Branch Messenger opened Branch accounts for Spark Drivers, and Walmart then deposited drivers’ pay into these accounts, without the drivers’ consent. “Walmart told Spark Drivers that they were required to use Branch to get paid and that they would terminate workers who did not want to use these accounts,” according to CFPB.
The agency said Walmart and Branch also allegedly misled workers about the availability of same-day access to their earnings, according to the suit. “Drivers had to follow a complex process to access their funds, and when they finally did, they faced further delays or fees if they needed to transfer the money they earned into an account of their choice.
“This resulted in workers paying more than $10 million in fees to transfer their earnings to an account of their choice,” CFPB said.
The Spark Driver Program employs so-called gig economy drivers to make “last mile” deliveries from stores nationwide. Branch Messenger offers a deposit account at Evolve Bank & Trust of Memphis, Tenn., that consumers, including the drivers, access through a digital app and debit card.
The CFPB also alleges that Branch engaged in a host of illegal activities related to consumer accounts, including failing to investigate alleged errors, failing to honor stop payment requests, failing to maintain necessary records, failing to provide certain disclosures, and illegally requiring consumers to waive their rights under the law.
The bureau said its lawsuit wants to stop the companies’ unlawful conduct, to provide redress for harmed consumers, and to impose a civil money penalty (CMP). The bureau offered no dollar amounts for redress or a CMP.
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