Walmart is taking legal action against Capital One, its credit card partnership partner, as the company seeks to end its agreement early, citing poor customer service standards.
In a lawsuit filed in the United States District Court for the Southern District of New York on Friday, Walmart accuses Capital One of not meeting the retail giant’s customer care standards in at least five critical service areas during a 12-month rolling period.
Walmart’s 2018 deal with Capital One was reportedly worth over a billion dollars, but the retail giant is now seeking to terminate the partnership.
Walmart has filed a lawsuit against Capital One to end their credit card partnership, contending that the bank did not meet its standards for customer service as the sole issuer of Walmart’s co-branded and private label credit cards within the U.S.
In the lawsuit which was brought in United States District Court for the Southern District of New York on Friday, Walmart seeks to terminate the deal it signed together with Capital One in 2018 “worth more than one million dollars.”
Capital One struggled to honor its obligations under its contract with Walmart in the lawsuit that it failed to live in line with its retail partner’s customer service standards in “at least five Critical service areas” in a twelve-month rolling period.
“Unfortunately, Capital One was repeatedly unable to provide the standards of customer service required in this contract” it states. “The (service loan agreements) provide … crucial for ensuring the high-quality customer service that is the foundation of the Walmart brand.”
Capital One failed to deliver replacement cards to customers within the crucial five-day timeframe it was legally required to do “99.9 percent of the time,” the lawsuit alleges that it did not always transfer payment and transaction information to account holders’ accounts promptly.
The lawsuit further claims that the company “admitted” that it was unable to comply with five of Walmart’s requirements for service.
Capital One is refuting its problems with servicing as grounds for Walmart to terminate the two companies’ relationship. The bank claimed in an email that the lawsuit is a part of Walmart’s efforts to “renegotiate the conditions for the agreement” as well as “end the agreement early.”
Capital One Has No Right to End the Partnership “Mid-stream”
“These service issues were not of any importance and were handled through Capital One pursuant to the agreements, without harm to the customers and the program, nor Walmart,” a Capital One spokesperson stated in a statement made to CBS MoneyWatch.
“Capital One contests the notion that Walmart is entitled to alter any of the provisions of the current partnership in mid-stream. We will vigorously defend our rights under the contract in the courts.”
The Capital One Walmart Rewards Card is a credit card with a co-branded logo that offers cash back for purchases in-store in accordance with the store’s site.
Cardholders can earn cashback of 5% on Walmart.com purchases that are for delivery or pickup, for instance.
Additionally, they receive a cashback of 5% on shopping in stores during the first 12 months that they make purchases using their Walmart Pay touch-free payment app according to the firm.
The agreement between both companies is scheduled to last until 2026, according to the Wall Street Journal report.
Walmart plans to launch an alternative credit card to its customers within the next few days a Walmart spokesperson said to CBS MoneyWatch.
“In the meantime, cardholders shouldn’t be affected by any interruptions in service and are able to keep using their current Capital One Walmart credit cards,” the retail giant announced by email.
Conclusion
In conclusion, Walmart’s decision to sue Capital One over its credit card partnership agreement marks a significant development in the financial and retail industries.
As the battle between the two corporate giants plays out in court, the outcome could have far-reaching implications for the future of co-branded credit card programs and the expectations for customer service standards between retailers and banks.
Only time will tell how this dispute will ultimately be resolved, but it will certainly be worth keeping an eye on as it continues to unfold.