Walmart is accused of illegally opening bank accounts for 1 million drivers

The Consumer Financial Protection Bureau (CFPB) has filed a lawsuit against Walmart and fintech company Branch Messenger, accusing the companies of forcing more than a million workers to use expensive checking accounts to access their paychecks.

According to the CFPB’s complaint, Walmart and Branch opened deposit accounts for Walmart’s Spark Drivers, who are classified as independent contractors, using their personal information, including Social Security numbers, without authorization.

The lawsuit alleges that Walmart drivers, who transport packages from the company’s warehouses to customers, could only deposit their pay into those Store accounts. Beginning in 2021, Walmart reportedly told employees that failure to use these accounts could result in job loss.

The lawsuit also said that accessing earnings through the accounts was a “complicated process,” often resulting in delays of several weeks, despite the company’s assurances of immediate access to payments. In addition, drivers reportedly paid a total of $10 million in “useless fees” to transfer their paychecks to other bank accounts, the CFPB said.

CFPB Director Rohit Chopra condemned the practice, saying, “Companies cannot force workers to be paid through accounts that drain their profits of useless fees.”

The lawsuit further described the typical Spark driver as “female, with children, no college degree and low income.”

Walmart has denied the CFPB’s allegations, saying it will vigorously defend itself in court. In a statement, Walmart said: “The CFPB’s rushed action is riddled with factual errors and contains exaggerations and flagrant inaccuracies of settled principles of law. The CFPB never allowed Walmart a fair opportunity to present its case during its expedited investigation. We look forward to vigorously defending the Company in a court that, unlike the CFPB, respects due process of law.”

The CFPB also accused Branch of misleading advertising and failing to investigate and resolve errors related to the accounts. Branch, however, denied the allegations, defending its agency by stating, “Despite the company’s extensive cooperation with its investigation, the CFPB refused to cooperate with Branch in any meaningful way on this matter, instead rushing to file complaint”.

Branch further claimed that the lawsuit was driven by a desire for “media attention” rather than concerns about protecting workers.

This lawsuit is part of a broader push for increased protections for gig workers, who are classified as independent contractors for companies like Uber, Lyft and DoorDash.

Earlier this month, the CFPB also filed lawsuits against major banks, including JPMorgan Chase, Bank of America and Wells Fargo, for allegedly failing to prevent fraud on the money-sending app Zelle.

The outcome of that case could be affected by the selection of a new CFPB director, as President-elect Donald Trump is expected to appoint a replacement. Jaret Seiberg, financial services policy analyst at TD Cowen Washington Research Group, noted that the future direction of the case will depend on the new director’s approach to such issues.