Walmart’s $800 Million Dispute

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By Published On: November 7, 20180 Comments

Walmart has reportedly filed a lawsuit against Synchrony Financial, claiming the company breached its contract with the big-box retailer.

According to the lawsuit, which was filed by Walmart on Thursday, the retailer is seeking $800 million in damages from Synchrony Financial, amidst claims the credit card issuer’s transaction fees were too high and approval rates too low.

Tensions between the two businesses originally peaked back in July, after Walmart announced it would be ending its 20-year partnership with the credit card company. At the time, Walmart signed a new agreement with Capital One, replacing Synchrony Financial as its primary credit card partner.

Synchrony Financial, however, has a slightly different version of the dispute, claiming its approval process and fees were the same for Walmart as they were for any other retailer.

The credit card issuer believes this lawsuit is a petty attempt for Walmart to avoid the contractually defined process for valuing the loan portfolio that Synchrony serviced for Walmart customers over the last 20-years.

Synchrony Financial has publicly stated that it uses the same underwriting and decision-making process when considering credit card applications for Walmart customers as it does with any other retail customer. The company claims the poor credit result of Walmart customers was the result of “the credit distribution to the applicants, the relative performance of Walmart cardholders and Walmart’s failure to promote the program,” a spokesperson said in an email to Retail Dive.

It’s likely that Walmart won’t be surprised by Synchrony Financial disputing the allegations, with a spokesperson from the retailer reportedly saying that Synchrony has made attempts to resolve the dispute, but failed to take responsibility for its actions. “We fully expect Synchrony to manufacture counterclaims in an effort to shift the focus away from its own conduct.”

According to Walmart, its new relationship with Capital One will be more advantageous for both the business and its customers, with Capital taking over Walmart’s credit card offerings as of August 2019.

Walmart believes the new deal “combines Walmart’s size, scale and leadership in omnichannel retailing with Capital One’s long-standing position as a technology leader within the retail financial services market.” In a press release earlier in the year, the company said it will be looking at providing an “exceptional cardholder experience”, as it moves away from its disputed partnership with Synchrony Financial.

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