FTC Seeks Contempt Ruling and $52.9 Million Relief Over Payment Processor Violations

USA: FTC Seeks Contempt Ruling and $52.9 Million Relief Over Payment Processor Violations

A Nevada federal court has been petitioned by the Federal Trade Commission to hold the operators of payment processor Cliq, Inc. in contempt for allegedly breaching a 2015 FTC order, with the agency seeking at least $52.9 million in compensatory relief for consumers. The motion, filed in January 2026, targets former Cardflex, Inc. and its executives Andrew Phillips and John Blaugrund.

The commission alleges that Cliq repeatedly ignored mandatory fraud‑prevention steps, processing transactions for merchants flagged by Mastercard’s MATCH list and for clients with high chargeback rates. According to the filing, the company also assisted those merchants in evading bank and network risk‑monitoring programs, and failed to conduct reasonable screening of high‑risk clients.

“Cliq and its operators flagrantly violated an FTC order requiring reasonable steps to prevent and detect fraud,” said Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection. “We will not hesitate to hold accountable companies that ignore red flags and distort the honest functioning of the U.S. payment system.”

Alleged Violations of the 2015 Order

The FTC contends that Cliq processed hundreds of millions of dollars for at least three merchants listed on Mastercard’s Member Alert To Control High (MATCH) list, a roster reserved for entities terminated for rule breaches such as excessive chargebacks. The agency further claims the processor neglected to monitor sales activity for signs of deception and continued processing for clients despite clear indicators of fraudulent behavior.

Potential Remedies Sought by the FTC

In addition to the $52.9 million in consumer compensation, the commission is requesting that the court permanently bar Phillips and Blaugrund from operating in the payment‑processing sector, modify the original 2015 order to reinforce compliance requirements, and appoint a receiver to oversee Cliq’s operations.

Implications for the Payment Processing Industry

If the court grants the FTC’s requests, the decision could set a precedent for stricter enforcement of fraud‑prevention obligations across the industry. Companies that process payments for high‑risk merchants may face heightened scrutiny and be required to implement more robust screening and monitoring protocols.

The motion underscores the FTC’s broader effort to protect consumers from deceptive financial practices and to ensure that payment processors adhere to established fraud‑prevention standards.

This report is based on information from Federal Trade Commission, licensed under Public Domain (U.S. Government Work). Source: Official U.S. Government release.