CFPB Sues Walmart and Branch Over Accounts for Gig Economy Drivers

Both Walmart and FinTech company Branch said Monday (Dec. 23) that they will defend themselves “vigorously” against a Consumer Financial Protection Bureau (CFPB) lawsuit filed against the companies.

The CFPB sued Branch and Walmart Monday, alleging that the companies illegally opened accounts for gig economy delivery drivers without their consent, required drivers to receive their pay through those accounts, collected junk fees from the drivers, and did not deliver the “instant access” to pay that they had promised.

The CFPB’s complaint centers on Walmart’s Spark Driver program, which includes gig economy drivers making last-mile deliveries from Walmart stores, and Branch’s deposit account that is accessible through a digital app and debit card, the CFPB said in a Monday press release.

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

Reached by PYMNTS, Walmart said in an emailed statement that it looks forward to defending itself in court.

“The CFPB’s rushed lawsuit is riddled with factual errors and contains exaggerations and blatant misstatements of settled principles of law,” the statement said. “The CFPB never allowed Walmart a fair opportunity to present its case during their rushed investigation. We look forward to vigorously defending the Company before a court that, unlike the CFPB, honors the due process of law.”

Branch said in a statement emailed to PYMNTS that the CFPB’s lawsuit misstates the law and facts and ignores the quick and easy access to funds that Branch provides to Walmart and the drivers.

The company added that it stands behind its model and services and that it will “defend this action vigorously.”

“Despite the company’s extensive cooperation with its investigation, the CFPB refused to engage with Branch in any meaningful way about this matter, instead rushing to file a lawsuit,” the statement said. “This approach makes clear that this litigation has nothing to do with the law or protecting workers and everything to do with the media attention garnered by a lawsuit involving one of the world’s biggest retailers.”

The CFPB said in the press release that its lawsuit seeks to stop the companies’ unlawful conduct, provide redress for harmed consumers and impose a civil money penalty that would be paid into the regulator’s victims relief fund.

Spark Driver, a loosely organized network of freelance drivers who use a Walmart-designed app to fulfill deliveries, plays a crucial role in Walmart’s ability to compete with Amazon deliveries, PYMNTS reported in November.

Businesses are looking to make their payments as fast as possible because individuals have been primed by eCommerce to expect instant satisfaction, Branch Chief Financial Officer Brian Whalen told PYMNTS in an interview posted in June 2023.

“In business, the trend is clearly toward getting everyone paid as soon as possible,” Whalen said when interviewed for the PYMNTS Intelligence report “Accounts Payable Payments: Solving Common Business Challenges.” “The companies that are moving faster in this direction have also created a real competitive advantage.”