The Federal Trade Commission (FTC) has requested that a federal court hold payment processor Cliq, Inc., formerly known as Cardflex, Inc., and its top executives in contempt for allegedly violating a 2015 order regarding illegal credit card processing.
In a motion filed in the U.S. District Court for Nevada, the FTC claims that CEO Andrew Phillips and Chief Technology and Security Officer John Blaugrund failed to meet their obligations under the previous order. The agency is seeking at least $52.9 million in compensatory relief for consumers, a permanent ban on Phillips and Blaugrund from working in the payment processing industry, and the appointment of a receiver to enforce compliance with the original order.
“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.”
According to the FTC, Cliq processed hundreds of millions of dollars in payments for clients listed on Mastercard’s Member Alert To Control High (MATCH) list—a registry of merchants removed from card networks due to rule violations such as high chargeback rates. Chargebacks occur when customers dispute transactions because products or services were not delivered as described.
The agency further alleges that Cliq assisted clients in evading bank and credit card network fraud monitoring programs, processed transactions for high-risk clients without proper screening for deceptive practices, and failed to monitor client activity adequately. This included continuing to process payments for clients with excessive chargebacks without confirming those businesses were not engaged in deception.
The FTC argues that these repeated violations warrant holding Cliq, Phillips, and Blaugrund in contempt of court, awarding compensation to affected consumers, and imposing stricter measures to ensure future compliance.
The Federal Trade Commission is responsible for promoting competition while protecting and educating consumers about potential risks related to business practices.
