Synchrony Financial is being sued by Walmart, with the retail giant accusing the Stamford-based company of violating its agreement on credit cards for Walmart shoppers.
In a lawsuit filed in the U.S. District Court of the Western District of Arkansas, Walmart claimed that Synchrony”™s underwriting standards created financial problems for the retailer. Walmart, which ended its two-decade partnership with Synchrony and began a new credit card partnership with Capital One Financial Corp. in July, stated in its lawsuit that it is seeking damages “in an amount to be proven at trial but estimated to be no less than $800 million.”
Last month, The Wall Street Journal reported that Walmart tried to pressure Synchrony into sharing a larger percentage of the revenue from the cards and approving more card applicants. Unnamed sources quoted in The Wall Street Journal report stated that Walmart was burdened with loan losses based on roughly 9 percent of outstanding balances on Walmart cards as of this past spring.
Synchrony responded to the lawsuit by accusing Walmart of bad faith and bad business practices.
“This lawsuit is nothing more than an attempt by Walmart to exert leverage and avoid the contractually defined process for valuing the loan portfolio that Synchrony has serviced on behalf of millions of Walmart customers for the last 20 years,” the company stated. “It is unfortunate that, despite our good faith efforts to resolve this commercial dispute amicably and in accordance with the contract, Walmart walked away from discussions and rushed to file suit.
Ultimately, Walmart is trying to avoid paying the fair market value for the portfolio as required by our contract. We believe Walmart”™s complaint is completely baseless and without merit, and we intend to vigorously defend our position.”
