Forever 21 parent ABG sues Bolt

Payment startup Bolt Financial is being sued by its most prominent customer Authentic Brands Group (ABG). However, Bolt said that ABG’s claims are without merit, and are a transparent attempt to renegotiate the terms of the companies’ agreements.

The complaint by Authentic Brands Group alleges that Bolt not only failed to deliver promised technology but during Bolt’s integration with Forever 21, the clothier lost out on more than $150 million in online sales.

The complaint also states that Bolt raised funding at increasingly high valuations by consistently overstating the nature of its integration with ABG’s brands. The allegations have created major new uncertainty for the payment startup, which was recently valued at $11 billion.

In its complaint, ABG said, “Bolt has utterly failed to deliver on the technological capabilities that it held itself out as possessing.” It further said that “Bolt has affirmatively misled investors” by invoking ABG’s brands in its materials, even though not all of those brands were using Bolt’s software. ABG described the integration with Forever 21’s mobile app as “disastrous,” and claimed it resulted in significantly fewer customers making purchases.

In response to the filing, Bolt’s Chief Executive Officer Maju Kuruvilla said in a statement, “We love all of our customers and we are thankful for the wonderful partnership with Forever21 and Lucky. It’s clear that Authentic Brands Group has confidence in Bolt's future as they are fighting to own a meaningful percentage of our business.”

The lawsuit has triggered new questions around Bolt, whose growth is based on signing up new customers by making online checkout easy for companies and consumers. Bolt streamlines the process for purchasing items online by allowing customers to buy an item with one click, from any page (not just the cart page), and makes money when a purchase is completed.