Walmart Sues Capital One Over an Alleged Failure to Properly Service Credit Card Holders

Upset with the customer-service aspects of its cobranded card-issuing deal with Capital One Financial Corp., Walmart Inc. has sued the bank, The Wall Street Journal reported late Friday. Among the allegations brought by Walmart is that Capital One failed to replace lost cards or post some transactions to customers’ accounts in a timely manner. The lawsuit was filed in the United States District Court for the Southern District of New York.

“We ended our agreement due to Capital One’s failure to meet a number of contractual obligations,” Walmart says in a statement sent to Digital Transactions News. “We look forward to bringing our customers a new credit card option that provides meaningful benefits and rewards soon. In the meantime, cardholders should not experience any disruptions in service and can continue to use their existing Capital One Walmart credit cards.”

A spokesman for the retailing giant adds, “A key point … to help with any consumer confusion is, in the meantime, cardholders should not experience any disruptions in service and can continue to use their existing Capital One Walmart credit cards.”

One potential motive for the lawsuit, according to the report in The Wall Street Journal, is that Walmart wants to renegotiate some terms of the 4-year-old deal, such as adjusting its loss-sharing agreement. Capital One reportedly balked at Walmart’s demands.

Capital One did not respond to questions from Digital Transactions News. In a statement emailed to SeekingAlpha.com, the bank alleges the lawsuit is an attempt by Walmart to renegotiate the terms of the credit card agreement or end it early. Capital One also claims the servicing issues alleged in the complaint were “immaterial” and had been “cured by Capital One pursuant to the terms of the agreement, without harm to customers, the program, or Walmart.” Capital One says it will defend its contractual rights in court.

In 2022, Walmart’s credit card program had $8.3 billion in receivables and generated about $214 million in net income, according to the Journal. Capital One has been overseeing Walmart’s card program since 2019, when the big-box retailer opted to end its relationship with Synchrony Financial. Capital One’s deal with Walmart reportedly runs through at least 2026.

Capital One could not be reached for comment.