Walmart is in hot water after regulators accused it of forcing its Spark drivers, who work as independent contractors making last-mile deliveries to customers, to use certain bank accounts in order to get paid. In many cases, regulators claim, Walmart illegally opened accounts for the drivers using their personal information.
The allegations. The Consumer Financial Protection Bureau, or CFPB, sued Walmart in district court this week, alleging that the retailer required its drivers to open an account with the fintech company Branch to obtain access to their earnings. Drivers who didn’t open a Branch account would be terminated from the Spark program, the agency said.
However, drivers soon found that opening a Branch account had consequences. According to the CFPB, drivers had to carry out a complex process to get access to their pay and often faced delays or fees if they wanted to transfer their earnings to another bank. Overall, the agency said that drivers paid more than $10 million in fees to transfer their earnings out of Branch accounts.
That’s not all, though. The CFPB is accusing Walmart of illegally opening Branch accounts for Spark drivers without their consent by using the personal information they had on hand, including social security numbers.
The Spark Driver program. Launched in 2018, Walmart’s Spark Driver program is the company’s version of Instacart. It allows independent contractors to get paid by shopping for or picking up orders from their local Walmart stores and delivering them to customers. The program is available in all 50 states and features more than 17,000 pickup points, according to Walmart’s website.
Notably, the same website doesn’t mention a requirement to open a Branch account to get paid, only stating that drivers can “link to an existing bank account or set up a digital wallet, which is the easiest and fastest way to receive your delivery earnings.”
In its lawsuit, the CFPB pointed out that the typical Spark Driver is a low-income woman with children who does not have a college degree. Drivers commonly use wages from Spark delivers for personal, household, and family expenses, such as groceries, housing, and utility payments.
Walmart’s response. Walmart pushed back against the CFPB’s claim that it had committed any wrongdoing, telling CNN in a statement that the lawsuit was “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,” the company said. “We look forward to vigorously defending the Company before a court that, unlike the CFPB, honors the due process of law.”
Scope. In a statement, the CFPB claimed that Walmart had taken advantage of more than a million delivery drivers. The agency is asking the court to ban Walmart and Branch from engaging in similar conduct in the future and relief and damages for those affected.
Images | Marques Thomas | Marques Thomas
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