According to published reports Friday (April 7), the retail giant accuses the bank of failing to live up to its customer care standards.
The companies announced a partnership in 2018, though it didn’t go into effect into the following year. As PYMNTS reported at the time, the collaboration made Capital One the exclusive issuer of Walmart’s credit card and co-branded credit card program in the U.S.
“Unfortunately, Capital One was consistently unable to meet the customer-service standards required by the contract,” Walmart’s attorneys said in the suit, filed in federal court in Manhattan.
According to the suit, Capital One missed the mark in a number of “critical” customer care categories, such as failing to promptly post transaction information to cardholders’ accounts, and not delivering replacement cards within five days.
Reached for comment by PYMNTS, a Capital One spokesperson called the Walmart suit an attempt to negotiate its existing partnership or end the deal prematurely.
“These immaterial servicing issues were cured by Capital One pursuant to the terms of the agreement, without harm to customers, the program, or Walmart,” the spokesperson said.
“Capital One disputes that Walmart has any right to change the terms of the existing partnership midstream, and we will vigorously protect our contractual rights in court.”
The lawsuit comes one month after the PYMNTS took a closer look at another Walmart credit card partnership, one that — as noted here — is a “shot across the bow of Amazon Prime.”
The deal lets American Express Platinum Card holders get a complimentary Walmart+ membership. When Amex members charge their Walmart+ monthly membership to those cards, they earn a statement credit that covers the $12.95 fee.
PYMNTS’ research has shown that one-fifth of all American adult consumers have a Walmart+ membership. Walmart management has said the retailer has also been capturing some share of $100,000-plus earners and younger consumers, which meshes with the Amex profile.
“Against that backdrop, the $155 Walmart+ credit seems to pale against the potential of the incremental spend that might accrue to Walmart’s coffers,” PYMNTS wrote in March.
“And the potential to see the cards wielded more often for everyday purchases might help Walmart give Amazon more of a run for its money in several key categories in the months and the years ahead.”
Since Walmart launched Walmart+ in late 2020, the share of U.S. consumers who have memberships has stayed around 15% to 20%, although many of those people have not been swayed away from Amazon Prime.
As PYMNTS reported last week, the most recent data shows that 3.2% of American consumers are exclusive Walmart+ subscribers, while 21% of consumers have both Walmart+ and Amazon Prime memberships.