Walmart fight to change the way shoppers pay after argument broke out over ‘repeated customer service failures’

WALMART has won a legal dispute allowing the retailer to axe its credit card provider early due to numerous failures.

In April 2023, the retailer based in Bentonville, Arkansas, filed a lawsuit against Captial One with whom it had a contract to issue Walmart credit cards.

However, the retailer appealed to the court for a ruling on its ability to terminate the contract early due to Captial One's failure of service.

"As part of that contract, the parties agreed to numerous service requirements that Capital One was obligated to meet," the lawsuit stated.

"Unfortunately, Capital One repeatedly failed to meet several of the most important requirements, which gave Walmart the right to terminate the contract."

Capital One argued against Walmart's claims for early termination which saw the case go to court.

On Tuesday, U.S. District Judge Katherine Polk Failla ruled in Walmart's favor.

Failla noted how the terms of the 2018 agreement between the two companies "clearly dictate" that Walmart was within its rights to end the contract due to Capital One's "repeated customer service failures."

The agreement notes that the credit card company must meet Service Level Agreements (SLAs) for customer service standards.

It also notes that some of these are "Critical SLAs" that are vital for customer service such as replacement cards being mailed to customers within five business days.

Under the terms of the contract, Capital One must meet this five-day standard "at least 99% of the time."

"Unfortunately, Capital One was consistently unable to meet the customer-service standards required by the contract," Walmart stated in its complaint.

"Capital One has admitted that in 2022 it failed to meet the minimum standard on at least five Critical SLAs."

This included issuing replacement credit cards and "timely payment processing and transaction posting."

'PLAIN AND UNAMBIGUOUS'

The contract explicitly states that if Capital One "fails to meet a Critical SLA, five or more times in a rolling 12 calendar month period...Walmart may terminate the Agreement."

Judge Failla said in her ruling that the terms of the agreement are "plain and unambiguous" and clearly side with Walmart's view.

She added that Capital One's interpretation of the contract would make the retailer unable to exit the partnership even if the bank failed all 13 SLAs four times a year.

Walmart slammed this interpretation of the contract by Captial One as "patently absurd."

Despite the clarity of the terms of the contract and the ruling by the court on Tuesday, Capital One has disagreed with the decision and is assessing its right to an appeal.

The judge informed both companies that they must advise the court by April 19 on how they plan to resolve existing claims and counterclaims.

The case is Walmart Inc et al v Capital One NA, U.S. District Court, Southern District of New York, No. 23-02942.

Walmart and Capital One have been contacted for comment.

A Walmart spokesperson issued the following statement to The U.S. Sun: "We’re pleased with the Court’s decision.

"As we’ve said all along, the unambiguous terms of the agreement entitled Walmart to terminate the parties ongoing relationship."