Walmart Bought a Finance App and Reduced Fraud Protections. Guess What Happened Next?

The retail giant has long sought to become a financial powerhouse. But after it acquired a neobank called One in 2022, fraud complaints multiplied and customer reviews cratered.

In its quest to become a dominant force in the financial sector, Walmart made a bold move by acquiring a neobank called One in 2022. Promising features like cash back on purchases and early access to pay, One Finance seemed like a promising addition to Walmart’s portfolio. However, after the acquisition, fraud complaints surged, and customer reviews plummeted. This article delves into the aftermath of Walmart’s purchase of One Finance, highlighting the increase in fraud and customer dissatisfaction.

The Rise of Fraud and Dissatisfaction

One Finance, previously a popular banking app, saw a significant increase in fraud and customer dissatisfaction after Walmart took control. Many customers, like Carl, a Walmart employee, fell victim to online thieves who drained their accounts within hours of receiving their pay. The enticing features that initially attracted customers, such as low fees and high interest rates, were overshadowed by unauthorized transactions and compromised accounts.

Walmart’s Financial Services Under Scrutiny

The problems faced by One Finance mirror the fraud and compliance issues previously uncovered in a ProPublica investigation into Walmart’s financial services business. The investigation revealed that Walmart neglected to address fraud concerns and provided inadequate employee training, resulting in over $1 billion in consumer fraud losses over the past decade. The acquisition of One Finance only exacerbated these issues.

Customer Complaints and Negative Reviews

The fallout from the acquisition was evident in the flood of customer complaints and negative reviews received by One Finance. The app’s rating on Google Play dropped from 4.6 to 2.8 stars, reflecting the dissatisfaction and frustration experienced by users. Social media platforms and the Better Business Bureau were inundated with complaints about fraud and poor customer support. Scammers took advantage of the weakened security measures, leading to a rise in loan and impersonation scams.

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Regulatory Concerns and Comparative Data

One Finance faced a higher rate of complaints at the federal Consumer Financial Protection Bureau (CFPB) compared to other large neobanks. The CFPB received 89 complaints about One, surpassing the number of complaints against similar neobanks like Dave. The rate of complaints per customer was also higher for One Finance compared to other neobanks. These statistics raise concerns about the lack of resources dedicated to resolving customer disputes and complaints.

Weakening Security Measures

One Finance’s security measures underwent changes after the acquisition, making it easier for scammers to gain access to customer accounts. The removal of the username and password requirement for mobile users and the reliance on a login code sent via text message created vulnerabilities that fraudsters exploited. Impersonation of company representatives through calls and messages became a common tactic, resulting in compromised accounts and unauthorized transactions.

Outsourced Customer Support and Fraud Review

To compound the issues, One Finance laid off its U.S. customer support agents and outsourced the roles to workers in India and El Salvador. This led to a decline in the quality of customer support, with outsourced agents often unable to handle complex issues. The outsourcing of fraud review also caused delays in resolving problems and led to the rejection of valid fraud reports. The lack of effective support and delayed responses frustrated customers and hindered the resolution of fraud-related issues.

Walmart’s Ambitions and the Threat to Consumer Banking

Walmart’s acquisition of One Finance was a crucial step in its ambition to enter the consumer banking sector. The retail giant had previously faced opposition in its attempts to establish a bank due to concerns about its potential dominance and impact on smaller banks. However, by partnering with a neobank, Walmart found a way to offer financial services without the need for regulatory oversight. The issues faced by One Finance now threaten Walmart’s aspirations in the industry.

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The acquisition of One Finance by Walmart has proven to be a double-edged sword. While Walmart aimed to expand its financial services and provide innovative banking solutions, the aftermath of the acquisition has been marred by increased fraud and customer dissatisfaction. The weakened security measures, outsourcing of customer support, and delayed fraud review have eroded trust and damaged the reputation of One Finance. As Walmart seeks to establish itself as a financial powerhouse, it must address these concerns and prioritize the protection and satisfaction of its customers.