CFPB sues Walmart, fintech over gig worker pay access

The Consumer Financial Protection Bureau is suing Walmart, as well as Branch Messenger, a financial technology company that offers deposit accounts at Evolve Bank & Trust. The consumer watchdog agency claims the two companies harvested more than $10 million in junk fees from gig workers participating in Walmart's Spark Drive program.

The Spark program allows Walmart customers to place orders using an app that routes orders through gig workers – often referred to as "last mile" drivers – for fulfillment from Walmart stores.

According to the CFPB complaint, Walmart forced these drivers to receive payments through Branch, often opening deposit accounts for them without their consent. The Spark drivers were told that they had to use Branch to get paid by Walmart, and that they would be terminated if they refused to have their wages delivered in this manner.

Walmart and Branch also misled drivers about the availability of same-day access to their earnings, the CFPB said. What's more, drivers had to follow a complex process to access their funds. When they did gain access, they faced further delays or fees if they needed to transfer the money they earned into a deposit account of their choosing.

In all, the drivers wound up paying more than $10 million in fees to transfer funds from Branch accounts to their chosen accounts.

"Walmart made false promises, illegally opened accounts, and took advantage of more than a million delivery drivers," CFPB Director Rohit Chopra said in a statement. "Companies cannot force workers into getting paid through accounts that drain their earnings with junk fees."

The CFPB also alleges that Branch engaged in a host of illegal activities related to consumer accounts, including failure 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.

Two years of federal law violations

The CFPB alleges that for approximately two years, beginning in 2021, Walmart and Branch violated federal law in several ways. These include:

• Illegally opening accounts through which drivers had to receive earnings, by using drivers' private information, including their Social Security numbers, without their consent. Earnings then were deposited into these accounts without authorization from the drivers, and drivers could not access the funds without agreeing to Branch's terms and conditions.

• Harvesting more than $10 million in junk fees from drivers for instantly transferring earnings from Branch to accounts of their choice.

• Deceiving drivers by claiming they could get instant access to pay, when in actuality many drivers experienced delays accessing their wages or were forced to pay fees to transfer their money elsewhere. Branch also deceived drivers about their ability to stop payments or make certain transfers from the accounts, the CFPB said.

Protecting workers

The CFPB's lawsuit seeks to stop the companies' unlawful activities, and to provide redress to harmed consumers, as well as a civil money penalty.

The bureau, in a Dec. 23, 2024, statement, noted that the action against Walmart and Branch is the latest to address consumer protections in the workplace. In October, it issued guidance that emphasized how companies using third-party consumer reports, including background dossiers and surveillance-based algorithmic scores must follow Fair Credit Reporting Act rules.

It also noted that this is not the first action it has taken against a partner of Evolve, which specializes in providing banking-as-a-service to fintechs. In May the consumer watchdog filed a lawsuit against SoLo Funds, a fintech in the short-term, small-dollar loan space. In that case, the bureau alleged SoLo engaged in unfair, deceptive and abusive conduct by servicing and collecting on loans that were void and uncollectible.

In June the Federal Reserve issued an enforcement action against Evolve for failing to police its fintech partners.

The CFPB was created under the Consumer Financial Protection Act, a provision of the Dodd-Frank Act, which authorized it to enforce consumer financial protection laws, including the Truth-in-Savings Act and the Electronic Funds Transfer Act. Although it is an independent agency, organizationally it is housed in and funded by the Federal Reserve.

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