Editor’s Note: This story has been updated to include a statement from a Walmart spokesperson.
Walmart Inc. (NYSE:WMT) shares are trading lower on Monday. The Consumer Financial Protection Bureau (CFPB) filed a lawsuit against the company and Branch Messenger over concerns regarding junk fees. Here’s what you need to know.
The Details: The CFPB has alleged that Walmart and Branch Messenger forced drivers to open deposit accounts filled with junk fees. The regulator sued Walmart and Branch Messenger on Monday for requiring drivers to use costly deposit accounts to get paid and deceiving drivers about how they could access earnings.
The suit claims that Walmart opened accounts for “last mile” drivers in its Spark Driver program and told workers that they would be fired if they did not use the specific accounts. Furthermore, the lawsuit alleges that Walmart misled drivers about the availability of same-day access to earnings.
"Walmart made false promises, illegally opened accounts, and took advantage of more than a million delivery drivers," said CFPB Director Rohit Chopra. "Companies cannot force workers into getting paid through accounts that drain their earnings with junk fees."
A Walmart spokesperson told Benzinga that the CFPB lawsuit contains “exaggerations and blatant misstatements.”
“The CFPB's rushed lawsuit is 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. We look forward to vigorously defending the Company before a court that, unlike the CFPB, honors the due process of law,” a Walmart spokesperson said.
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The lawsuit claims that drivers were forced to navigate a complicated process to access their funds, and then encountered additional delays or fees when they opted to transfer the money to an account of their choice.
The government oversight agency stated that Spark Drivers paid over $10 million in junk fees to Branch Messenger in order to instantly transfer their earnings to a different account.
The CFPB also claimed that Branch engaged in other illegal practices including failing to investigate errors, honor stop payment requests, maintain records and provide required disclosures.
According to Reuters, Branch Messenger representatives rejected the claims and accused the CFPB of “rushing” to file a lawsuit in an attempt to gain media traction.
“Branch stands behind its model and services and we will defend this action vigorously,” the company reportedly said.
WMT Price Action: At the time of writing, Walmart stock was down 2.01% at $90.39, according to data from Benzinga Pro.
Image via Shutterstock.
