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Texas-based Slide Fire says the financial institution that processed transactions for its online store is holding “hostage” more than $1.6 million in an effort to force the gun accessory maker into a less favorable business agreement.
According to the lawsuit, Slide Fire and Merrick entered into an agreement to process sales through the company’s online retail store in 2011 in which the bank could hold onto a “reasonable amount” of funds to cover chargebacks. The company had a chargeback rate of about 0.5 percent of total sales before the 2017 shooting. However, after the shooting, when sales increased, the chargeback rate fell to 0.3 percent, yet, Merrick withheld about 20 percent of total sales.
Merrick held onto a significant amount of those funds for nearly 90 days, which hurt Slide Fire’s ability to fund operations, the lawsuit says. As a result, the company sought a new merchant to process sales and ended its relationship with Merrick in December. Yet, the bank continues to hold $1.63 million until the company agrees to an “onerous agreement providing new and unreasonably expanded personal guarantees, warranties, covenants, and indemnities.”
In the complaint, Slide Fire lists six causes of action that include breach of contract and deceptive trade practices, and asks the court to award it the more than $1.6 million plus damages.