The Federal Trade Commission (FTC) has asked a federal court to hold payments processor Cliq and two of its executives in contempt of a 2015 court order with the agency over allegations of illegally processing credit card payments.
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The FTC alleges that Cliq, formerly known as Cardflex, along with its operators, CEO Andrew Phillips and Chief Technology and Security Officer John Blaugrund, have flouted their obligations under the 2015 order.
The commission has asked the court to impose at least $52.9 million in compensatory relief for consumers, modify the 2015 order to permanently ban Phillips and Blaugrund from the payment processing business, and appoint a receiver to ensure Cliq and its operators comply with the 2015 order’s requirements.
Cliq violated numerous provisions of the 2015 order while processing for companies expressly prohibited, including a group of merchants that have separately been indicted for crimes related to the processing, says the FTC.
Among the specific allegations, the commission says Cliq processed hundreds of millions of dollars in payments for at least three clients on Mastercard’s Member Alert To Control High (MATCH) list, which includes merchants terminated for violating card brand rules such as having high chargeback rates.
“Cliq and its operators flagrantly violated an FTC order requiring reasonable steps to prevent and detect fraud,” says Christopher Mufarrige, director, FTC 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.”