CFPB sues Walmart and fintech over driver payment program
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The Consumer Financial Protection Bureau filed a lawsuit against Walmart and its fintech partner, Branch Messenger, over a worker payment program that allegedly forced last-mile drivers to open costly deposit accounts to get paid.
Why it matters: The CFPB is issuing a flurry of enforcement actions and rules proposals in the waning days of the Biden administration.
Driving the news: The suit, filed in the U.S. District Court for the District of Minnesota, alleges that starting in mid-2021, Walmart required workers under its Spark Driver program to use Branch accounts or face termination.
- The suit claims the companies opened Branch accounts for drivers without their consent and deposited pay into those accounts without their authorization.
- It further claims that the companies misrepresented drivers' ability to get "instant access" to their pay, harvesting over $10 million in so-called junk fees from drivers who paid to transfer earnings to their account of choice instantly.
The other side: "Branch strongly disagrees with the lawsuit filed today by the CFPB, which misstates the law and facts, and includes intentional omissions to mask the Bureau's clear overreach," the company said in a statement.
- "The CFPB never allowed Walmart a fair opportunity to present its case during their rushed investigation. We look forward to vigorously defending the Company before a court that, unlike the CFPB, honors the due process of law," Walmart said in a statement.
Between the lines: The latest enforcement action is part of a larger push by CFPB director Rohit Chopra to take care of pending business before the new administration takes over.
- Late last week, the CFPB sued JPMorgan Chase, Bank of America, Wells Fargo, and Zelle's operating company for allegedly failing to prevent fraud on the peer-to-peer payment platform.
- Earlier in the month, it filed suit against Google, seeking to place the Internet giant's payment division under federal supervision.
- It recently proposed rules to limit overdraft fees at large banks and curtail data brokers from selling consumers' personal and financial information.
- It also issued a policy circular warning that credit card companies may be breaking the law when they devalue or cancel reward points.
The intrigue: It's unclear how many proposed rules or actions will survive or be enforced under a second Trump administration.
- Elon Musk, who has been wildly influential in shaping Trump's incoming cabinet and policies, said earlier this month that the CFPB should be "deleted."
- As co-head of the Department of Government Efficiency, Musk wouldn't have the power to dissolve the CFPB. Still, DOGE could suggest spending cuts or bureaucratic streamlining that would hamstring the agency.
Editor's Note: This story has been updated to add Walmart's statement.
