Dec. 23 (UPI) — The U.S. Consumer Financial Protection Bureau on Monday sued Walmart and a financial tech company over allegations the retail giant forced drivers to use costly, complicated deposit accounts in order to get paid and raked in millions in the process.
The federal agency said Walmart and its vendor, Branch Messenger, allegedly forced drivers who were part of Walmart’s Spark Driver gig-work platform to utilize Branch’s digital deposit accounts to be paid, going so far as to add that workers would be terminated if they did not use the Branch platform.
“Walmart made false promises, illegally opened accounts, and took advantage of more than a million delivery drivers,” CFPB Director Rohit Chopra said.
The suit alleges that for two years beginning in 2021 that Walmart and Branch opened accounts for new drivers using personal information such as Social Security numbers without their consent and deposited pay into the accounts without drivers’ authorization.
The drivers were then unable to access the funds without agreeing to Branch’s terms and conditions while drivers faced the threat of termination if they refused to use the accounts.
Branch is a financial technology company that offers a deposit account at Evolve Bank & Trust that consumers access through a digital app and debit card, CFPB officials said.
It’s further alleged the two companies misled gig workers about the availability of same-day access to earnings and managed to harvest more than $10 million in junk fees when workers took steps to transfer their compensation to a separate banking account of their own choice.
“Companies cannot force workers into getting paid through accounts that drain their earnings with junk fees,” the CFPB director added.
The final proposal of a new CFPB rule would require banks, credit card issuers, and other financial providers to “unlock” an individual’s personal financial data and transfer it to another provider at the consumer’s request without cost, moving the United States closer to an “open banking.”
Meanwhile, tech billionaire Elon Musk, who holds billions in taxpayer-funded government contracts, has called for the CFPB to be abolished.
This arrived less than a week after the U.S. Federal Trade Commission approved in a 4-1 vote its final policy rule to ban so-called junk fees for tickets and hotels amid a successful Biden administration crackdown.
“If a firm tells its workers they can only get paid through expensive deposit accounts where funds are hard to access or transfer, it may be breaking the law,” FTC Chair Lina M. Khan stated early Monday afternoon on social media.