Walmart Inc and its financial technology partner, Branch Messenger Inc, are facing allegations from the US Consumer Financial Protection Bureau (CFPB) over claims that they opened costly bank accounts for delivery drivers without their consent, as per Bloomberg.

In a lawsuit filed Monday in Minnesota federal court, the CFPB accused the companies of requiring drivers in Walmart’s Spark Driver programme to use these accounts to receive payment, with termination as the alternative, the report added.

“Walmart made false promises, illegally opened accounts, and took advantage of more than a million delivery drivers,” said CFPB Director Rohit Chopra in a statement regarding the lawsuit, as quoted by Bloomberg.

Branch Messenger has denied the allegations, asserting that the company “stands behind its model and services and will defend this action vigorously.”

Meanwhile, Walmart vowed to contest the lawsuit, describing the CFPB’s investigation as “rushed” and the complaint as “riddled with factual errors,” according to Bloomberg.

The CFPB claims Walmart required delivery drivers to utilise accounts provided by Branch Messenger, which partners with Evolve Bank & Trust for its deposit accounts and debit card services. This financial arrangement has drawn scrutiny following Evolve’s prior involvement with Synapse Financial Technologies Inc, a fintech that declared bankruptcy earlier this year, the report added.
CFPB claims drivers were misled about accessing earnings

The lawsuit further alleges that drivers were misled about access to their earnings. According to the CFPB, while immediate access to pay was advertised, drivers encountered long delays and significant barriers before retrieving funds. In some cases, drivers were never able to access their money.

For those who managed to use the accounts, immediate fund transfers incurred fees—either 2 per cent of the transferred amount or $2.99, whichever was higher. A no-cost transfer option took up to five days, and the CFPB claims that few drivers were informed of this option. Additionally, drivers faced limits on daily and monthly transfer amounts.

Walmart launched its Spark delivery service in 2018 as a means to fulfil online orders through third-party drivers. The retailer recently announced that US e-commerce sales had risen over 20 per cent in the latest quarter.

This legal challenge marks another enforcement action for the CFPB as it accelerates its regulatory efforts. Earlier this month, the agency sued major US banks over Zelle fraud issues and implemented a cap on overdraft fees.