PSW Billing has sued E-Commerce Billing and Processing, Fenlight Properties, and Leumi Bank for breach of contract and unfair trade practices including a trade libelaccusation that they started unfounded rumors that PSW was "going out of business" in midsummer over a broken credit processing deal.
According to a court filing, a copy of which was made available to AVN.com ECB and Fenlight reneged on the deal in July, according to what the filing describes as ECB and Fenlight alarm over "projected high future chargebacks," and not PSW's actual record of chargebacks, which PSW maintains were "well below the agreed-upon, contracted maximum."
The filing said ECB and Leumi Bank, the latter an Israeli-based bank, withheld monies due to PSW clients, and began a round of going-out-of-business rumors, which bedeviled PSW at the time of the summer's Internext trade show and, PSW accuses, further damaged PSW's business by knowingly creating cash flow issues for PSW and its clients.
According to the court filing, PSW entered into a late 2002 bank processing deal with ECB and Fenlight in which those two would "remit monies to PSW on a weekly basis," except for a ten percent reserve fund for up to six months, and a fixed fee. The condition was that PSW would keep the chargeback ratio under 2.5 percent, with "fines and other fixed financial consequences" if the ratio was passed. PSW asserts itschargeback rate never exceeded 1.2 percent.
ECB told PSW in late July that the deal was off. "ECB's justification," the filing said, "was that it projected high chargebacks in the future for ECB's account and expected Visa (and) MasterCard to issue fines. The basis for this projection, and the right to make such a projection, were not explained, and no evidence of any fines has been offered."
The filing also claims ECB attended Internext in early August to solicitbusiness for their own processing operations. These solicitations, PSW charged further, included starting and spreading speculation that PSW "was going out of business" due to financial difficulties PSW's action claims "was (the defendants') unjustified withholding of monies owed."
A source close to the case told AVN.com the skirmish has affected PSW's business volume and reputation, but the company will continue to "push forward, working diligently on behalf of its clients to retrieve monies withheld by the bank, making clear that any outstanding earnings will be paid in full." Company officials declined direct comment on the case for the time being.
The case was filed and will be heard in federal court in southern Florida, where ECB and Leumi principals are said to live and where the acts PSW accuses them of committing occurred. PSW itself is based in Rhode Island.
To view the court filling visit http://www.pswbilling.com/news/20030930-psw-vs-ecb.pdf
