MyPillow and CEO Mike Lindell are again suing a merchant cash advance company, accusing the lender of charging an illegally high interest rate.
It’s the third such lawsuit the Minnesota-based company and its nationally prominent founder have brought against a merchant cash advance firm, which effectively offer payday loans for businesses.
The suit claimed New York-based Merchant Capital duped “cash-strapped” MyPillow into borrowing $2 million in July, with daily payments of $41,400. The agreement had a range of “one-sided and unconscionable” provisions, including “a prohibition against the diversion of any funds in any of MyPillow’s bank accounts,” the complaint said.
MyPillow and Lindell, who personally guaranteed the loan, “thus fell victim to all of these and other predatory tactics of the typical merchant cash advance company,” according to the lawsuit, which was filed last week in Carver County District Court.
Last year, Merchant Capital sued MyPillow for nonpayment, alleging the company stopped allowing daily debits from its bank account in October and still owes $678,000 out of a total repayment cost of $2.9 million.
The text of Lindell’s latest suit is nearly identical to two previous lawsuits against other merchant cash advance companies that concern a combined $2.1 million in loans with total repayment cost of $3 million.
MyPillow’s financial woes run even deeper. Another lender, Riverside Capital, says MyPillow owed $3.8 million as of October, according to court documents, while Samson Horus alleged a $410,000 balance owed on a $4.5 million loan with weekly payment terms.
Some of those companies have sued MyPillow for nonpayment, filed liens against the company and demanded Amazon hand over MyPillow revenue directly to the lenders.
Lifetime Funding has claimed in a lawsuit that MyPillow abruptly stopped allowing daily payments on a $600,000 cash advance in October, less than a month after the lender agreed to front money in exchange for a percentage of sales.
MyPillow also started filing suits against merchant cash advance companies that month.