The Consumer Financial Protection (CFPB), an independent agency of the USA government, lodged a complaint against retail giant Walmart and Branch Messenger, a work-scheduling platform, on Monday. They were charged for forcing Walmart delivery drivers to utilize costly deposits and poorly managed accounts to get paid. This forceful arrangement cost them %10 million in junk fees, which ended up misleading the Walmart delivery driver. This lawsuit by CFPB is targeted at the Spark Driver Program of Walmart. This lawsuit has also negatively affected Walmart’s stock.
Walmart Delivery Driver: What is the Lawsuit?
The lawsuit of CFPB is focused on how Walmart delivery drivers were forced to follow certain orders from their employers without any prior notice or knowledge. According to the lawsuit, the Walmart delivery drivers were forced, under the Spark Driver Program, to open and utilize the accounts on the Branch to get their pay.
As per the allegation of CFPB, Branch, and Walmart opened accounts for Walmart delivery drivers without informing them and obtaining their consent. The drivers were even threatened to get their contracts terminated upon non-compliance of the same. The government alleges the following:
Hidden Fees
There were some hidden fees that the Walmart delivery drivers were required to pay for using their accounts, such as for transferring fees or withdrawals.
Data Exploitation
The data and information of Walmart delivery drivers were exploited by Branch. The company shared the personal and financial data of the drivers with third parties without their consent. It violated the data privacy of the Walmart delivery drivers.
Restricted Access
The Walmart delivery drivers were given restricted access to their accounts. They faced limitations, delays, and issues while accessing their accounts and earnings. It caused them financial problems and hardships.
The CFPB declared a statement on social media platform X, “Today, the CFPB sued Walmart Inc. and Branch Messenger, Inc. for forcing gig economy drivers to use costly and risky accounts to get paid and for deceiving workers about how they could access their earnings.”
The Followed Payment Practices Were Misleading
According to the lawsuit of CFPB, the followed practices by Branch and Walmart were misleading Walmart delivery drivers regarding their earnings.
It made the drivers pay almost $10 million in fees for transferring the money to their preferred accounts in other banks. The Walmart stock has been hit by this lawsuit.
“Walmart made false promises, illegally opened accounts, and took advantage of more than a million delivery drivers,” CFPB Director Rohit Chopra said in a press release. “Companies cannot force workers into getting paid through accounts that drain their earnings with junk fees.”
Apart from the case regarding the Walmart Delivery Driver, this lawsuit accuses the Branch of some other illegal activities, such as neglecting needed record-keeping, ignoring stop payment requests, and failing to investigate errors.
According to CFPB, Branch violated these things for around 2 years, which started in 2021. This lawsuit is attempting to compensate the affected Walmart delivery drivers, halt the ongoing illegal financial practices, and impose a fine on Branch and Walmart. The fine amount will be given to victims relief fund of CFPB.
Government’s Stance – Walmart Delivery Driver
The DOL (Department of Labo) and the FTC (Federal Trade Commission) are spearheading the legal actions of this lawsuit. Lina Khan from FTC said, in a joint statement, “Gig workers are entitled to transparency and fairness in how they are paid. Walmart and Branch failed to uphold their obligations, and we will hold them accountable for exploiting delivery drivers.”
DOL also has the same opinion on the same. They suggest that there should be stronger rules, regulations, and supervision to protect the rights of economy gig workers who mostly lack the essential safety nets.
How Have Branch and Walmart Responded?
Both Branch Messenger and Walmart have promptly denied all the allegations against them. They claimed that the CFPB did not give them enough time to defend themselves prior to filing the lawsuit.
Walmart said, “We look forward to vigorously defending the company before a court that, unlike the CFPB, honors the due process of law.”
A Walmart spokesperson also released a statement to CNBC saying ‘“Walmart made false promises, illegally opened accounts, and took advantage of more than a million delivery drivers,” CFPB Director Rohit Chopra said in a press release. “Companies cannot force workers into getting paid through accounts that drain their earnings with junk fees.”
On the other hand, a Branch representative said that they do not agree with the lawsuit filed by the CFPB because it misstates the facts and law. Branch also thinks that the lawsuit intentionally omits facts and figures to mask the Bureau’s clear overreach.
Other Actions and Initiatives of CFPB
Other than the Walmart delivery driver case, the CFPB is also working with its other actions and initiatives on worker protection. It includes employer-driven debt and guidance on background checks. It was the first action taken by CFPB against a fintech partner of Evolve Bank & Trust associated with deposit accounts.
This investigating agency also filed another lawsuit against another Evolve partner in the short-term loan segment. Due to this, the Federal Reserve took action against the Evolve Bank & Trust in June for failing to properly oversee their fintech partners.
In recent times, CFPB has also filed a lawsuit against organizations like Zelle payment network, Wells Fargo, Bank of America, and JPMorgan Chase. Their allegation was that these organizations failed to offer victim reimbursement or investigate fraud complaints. According to this lawsuit, consumers have lost an aggregate amount of $870 million since 2017.
Impact on the Gig Economy – Walmart Delivery Driver
It has hit Walmart stock. The impact on the gig economy due to this lawsuit will be far-fetched as thousands of Walmart delivery drivers and millions of individuals are associated with this field. These individuals are independent contractors who lack traditional employment perks and benefits. Their advocacy groups and communities have embraced the legal actions against the accused. They think that the gig workforce and Walmart delivery drivers need proper protection from systematic errors, mistakes, and exploitations.
Jane Collins, who is the director of the National Gig Workers Alliance, said to the press, “This lawsuit highlights the urgent need for better protections for gig workers,”
He further explained, “These drivers play a crucial role in the retail supply chain, and they deserve transparency, fair pay, and respect.”
What’s Next?
It is expected that Walmart and Branch will fight in court vigorously against the lawsuit. The lawsuit seeks civil penalties against Branch and Walmart monetary restitution for the affected Walmart delivery drivers. It will also prevent further such violations. According to the legal experts, this will be a prolonged battle.
This lawsuit and case regarding Walmart delivery drivers has also raised an important question. As to whether this is high time to create a segment between gig workers and independent contractors.
It also seeks solutions for the responsibility of the farms and corporations to ensure fair treatment. Only time will tell what will be the legal outcome of this lawsuit.
Conclusion – Walmart Delivery Driver
The Walmart delivery driver lawsuit has already garnered quite a lot of attention from all around the world. In this high-profile case, both the Branch Messenger and Walmart are preparing to defend themselves. The game has just started, and only the future will tell what it unfolds.
FAQs – Walmart Delivery Driver
Has CFPB Lawsuit Hit Walmart Stock?
Ans: Yes, since CFPB filed its lawsuit against Walmart, the Walmart stock has been hit negatively.
Is There High Demand for Walmart Delivery Driver Jobs?
Ans: Yes, there is a high demand for delivery drivers at Walmart. People opt for Walmart careers for better paychecks and a stable future. Visit Walmart.com to know more about this.
What Do Walmart Delivery Drivers Do?
Ans: A delivery driver transports orders from Walmart distribution centers or stores to the homes of the customers.
Is Walmart Distribution Effective and Efficient?
Ans: Walmart has one of the most effective and efficient distribution. The Walmart distribution center has a good reputation.
