Despite the seemingly banal nature of one-click checkout technology, companies in the sector have been rife with drama in recent months.
Bolt Financial Inc., a startup based in San Francisco that offers one-click checkout services to e-commerce sites, is being sued by Authentic Brands Group (ABG), the parent company of Forever 21, claiming that Bolt failed to deliver on promises in a contract related to the implementation of the technology.
The March 4 filing in the Southern District of New York, first covered by Bloomberg on Tuesday, includes claims that the retailer lost out on $150 million in sales while it integrated Bolt's service.
"Forever 21, in particular, has experienced significant and recurring technical problems caused by Bolt," the court filing said. "A third ABG brand partner — Brooks Brothers — was forced to abandon, at least temporarily, its integration with Bolt in June 2021 due to Bolt’s action or inaction which resulted, inter alia, in persistent technical product defects."
The suit claims that as part of its agreement with Bolt, ABG is entitled to purchase a 5% stake in Bolt at $29 million, which would be worth around $500 million based on its current valuation.
In its answer to the lawsuit, Bolt called the claims "a transparent attempt" to renegotiate terms of the agreements between the companies.
"We are committed to providing all of our customers with a great product and we are thankful for our wonderful partnership with Forever 21 and Lucky Brand which continues to be strong," said Bolt CEO Maju Kuruvilla in a statement via email. "Although we deny all of Authentic Brands Group’s allegations, it's clear that ABG has confidence in Bolt as they are fighting to own significant equity in our business. We look forward to continuing to work closely with Forever 21 and Lucky Brand on delivering the best checkout experience for their shoppers."
ABG, which did not return a request for comment, also alleges in its suit that Bolt disclosed confidential aspects of their deal with the public and investors and in particular claimed it offered services to all ABG brands including Reebok before ABG had officially acquired the sneaker company.
Core to the suit is Bolt's promise to deliver a subscription product called AllPass, which would work across ABG brands and allow customers to sign up to receive free shipping and product discounts. ABG claims that instead of delivering the product, Bolt developed a "near identical" subscription product called Bolt+.
"ABG recently learned that Bolt, contrary to its obligation to devote time and resources to the development of AllPass in order to meet the mutually expected and agreed upon launch schedule set forth in the Program Agreement, has instead devoted its energies to developing a competing product — hardly a commercially reasonable move and inconsistent with Bolt’s contractual responsibilities to ABG," the filing said. "Specifically, Bolt revealed on a November 2021 call with potential investors that it had built ‘Bolt+’— a subscription product to be offered to retailers that use Bolt."
Despite the lawsuit, the Forever 21 website is still using Bolt for its checkout function and Bolt is still advertising Forever 21 as a high-profile client on its website.
The lawsuit was filed just months after Bolt founder Ryan Breslow stepped down as CEO to serve as executive chairman after making a number of incendiary comments on Twitter, calling Y Combinator and other fintechs mafia-like. He said the fintech Stripe backed its one-click competitor Fast as a blatant way to take down his company.
Fast, also based in San Francisco, recently imploded after drastically overspending while generating scant revenue. It was unable to find more funding to continue.
One-click checkout companies have risen to prominence after Amazon's patent on the technology expired in 2017. Despite the products inherent simplicity, startups have struggled to implement simple one-click solutions that work seamlessly on the multitude of third party e-commerce sites.
