Walmart and Branch Messenger Face CFPB Lawsuit Over Driver Pay Program

The Consumer Financial Protection Bureau (CFPB) is suing Walmart and payments platform Branch Messenger for allegedly charging “junk fees.” The lawsuit contends the two companies opened deposit accounts for delivery drivers without consent and forced drivers to use the accounts or face termination.

Walmart purportedly required delivery drivers to use a Branch Messenger account to get paid. According to the CFPB, Walmart drivers were told they would have “instant access” to their wages, but supposedly, there were often significant delays in getting the funds. In addition, Branch users had to pay transfer fees to move money to other accounts. All told, the drivers collectively shelled out over $10 million in unwarranted charges.

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

Walmart and Branch Messenger May Issue Refunds and Pay Fines

The CFPB alleges Walmart and Branch engaged in the illegal activities for at least two years, starting in 2021. With the lawsuit, the watchdog agency is asking the parties to refund fees to drivers and pay fines to a victim relief fund set up by the CFPB.

According to CBS News, both companies have “vowed a vigorous defense” against the lawsuit.

“The CFPB’s rushed lawsuit is riddled with factual errors and contains exaggerations and blatant misstatements of settled principles of law. The CFPB never allowed Walmart a fair opportunity to present its case during their rushed investigation,” Walmart told the outlet in a statement.

Branch Messenger is also committed to fighting the lawsuit, accusing the CFPB of overstepping its authority and including “intentional omissions” in its suit.

“Branch has provided Walmart and their driver partners valuable services allowing quick and easy access to funds via their business accounts — a key fact the bureau’s press release omits,” the company stated in an email to the outlet.

Branch is a fintech company that works with Evolve Bank & Trust to open deposit accounts. In May, the CFPB went after another Evolve partner, SoLo Funds, for allegedly misrepresenting the total costs of consumer loans. A month later, the Federal Reserve took its own action against Evolve for not appropriately supervising its fintech relationships.

The CFPB’s action against Walmart and Branch is just another in a line of crackdowns aimed at tamping down potentially unfair or unnecessary “junk fees.” Earlier this month, the government agency issued guidance that put limitations on the amount banks can charge for account overdrafts.