Following the horrible tragedy in Las Vegas, the firearm accessories-maker Slide Fire found itself in the spotlight, and not in a favorable way. It was blamed for everything under the sun, despite having been in existence for some time and Vegas being the first time one of its products had been used illegally, so far as I’ve been able to find.
Eventually, the company decided to shutter operations.
However, the company still has $1.6 million in revenue outstanding. Apparently, the financial institution it used for credit card processing is holding onto it.
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.
By withholding the funds, Utah-based Merrick Bank Corporation is trying to “shield themselves from tangential, hypothetical, unviable, and currently non-existent liability in personal injury lawsuits involving (Slide Fire),” according the complaint, obtained by The Trace, filed in an Abilene federal court in April.
The lawsuit says Merrick took advantage of the negative attention Slide Fire had received after the deadly shooting at the Route 91 Harvest music festival in Las Vegas last October. During the incident, a gunman used a dozen or so rifles equipped with Slide Fire’s bump stock — a device that mimics full-auto firing — to murder 58 people and cause injury to some 850 others.
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.”
It sounds to me like Merrick is hoping to leverage the public’s outrage toward Slide Fire into making the company play by a whole new set of rules.
Frankly, if Slide Fire severed ties with the company, there’s no longer any reason to withhold any funds. After all, there won’t be chargebacks moving forward.
However, I suspect that none of that really mattered. What probably mattered more was that Slide Fire wasn’t a popular company and Merrick figured it could do whatever it wanted and get away with it. Merrick possibly assumed the courts would side with them.
Unfortunately, that’s just speculation. I have yet to see the agreement that Slide Fire and Merrick signed when it first entered into a business arrangement. Even if I had, I’m probably not the best person to interpret such an agreement.
That said, financial institutions are seemingly ganging up on the firearm industry, so nothing surprises me at this point.