Quick Answer: The FTC is asking a federal court to hold payment processor Cliq and its operators in contempt for systematically violating a 2015 order that required them to screen for fraudulent merchants. The FTC alleges Cliq processed hundreds of millions of dollars for high-risk clients that were processing fraudulent credit card transactions, and is seeking $52.9 million in consumer relief.
Ever wonder how scam companies manage to charge your credit card in the first place? Someone has to process those payments—and today we’re looking at what happens when that someone ignores the rules.
The Federal Trade Commission has asked a federal court to hold Cliq, Inc. (formerly Cardflex, Inc.) and its operators in contempt for systematically violating their 2015 settlement with the agency. The FTC alleges that Cliq continued processing payments for fraudulent merchants despite being under an order requiring them to screen for exactly this kind of activity.
The Background: A 2015 Settlement Ignored
Back in 2015, Cliq (then called Cardflex) and its operators—CEO Andrew Phillips and Chief Technology and Security Officer John Blaugrund—settled FTC charges that they had illegally processed about $26 million in unauthorized consumer charges for a company called I Works.
That settlement required Cliq to take reasonable steps to screen clients and prevent processing for deceptive merchants. According to the FTC, they didn’t.
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Why This Matters: Payment processors are the gatekeepers. When they ignore red flags, they enable the scams that cost consumers billions. Every fraudulent charge that hits your credit card went through someone’s payment system.
What the FTC Alleges
The FTC’s contempt motion alleges that Cliq violated multiple provisions of the 2015 order while processing for companies that were expressly prohibited. Some of these merchants have separately been indicted for crimes related to this processing.
Specific allegations include:
- MATCH-listed merchants: Processed hundreds of millions of dollars for at least three clients on Mastercard’s “Member Alert To Control High” (MATCH) list—merchants terminated for violations like excessive chargebacks
- Helping clients evade detection: Assisted clients in avoiding bank and credit card network fraud monitoring programs
- Inadequate screening: Processed for high-risk clients without making reasonable efforts to determine if they were deceptive
- Failure to monitor: Did not adequately monitor client activity to detect deceptive practices
What the FTC Wants
The FTC 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
- Appoint a receiver to ensure Cliq complies with the order’s requirements
FTC Bureau of Consumer Protection Director Christopher Mufarrige stated: “Cliq and its operators flagrantly violated an FTC order requiring reasonable steps to prevent and detect fraud. We will not hesitate to hold accountable companies that ignore red flags and distort the honest functioning of the U.S. payment system.”
The Bigger Picture
This case illustrates something important: scam companies don’t operate in isolation. They need banks, payment processors, and other infrastructure to actually take money from consumers.
When payment processors look the other way—or actively help fraudulent merchants avoid detection—they become enablers. High chargeback rates are a clear warning sign that consumers are disputing charges because they didn’t get what they paid for (or didn’t authorize the charge at all).
What Chargebacks Tell Us: When a merchant has excessive chargebacks, it means consumers are regularly disputing their charges. That’s a red flag that something is wrong—either the product isn’t as described, the service wasn’t delivered, or consumers didn’t authorize the charges in the first place.
If You’ve Been Charged by a Fraudulent Company
If you’ve had unauthorized charges on your credit card from a company you don’t recognize or didn’t authorize:
- Dispute the charge with your credit card company immediately
- Report the company to the FTC at ReportFraud.ftc.gov
- Check your credit reports for other suspicious activity
If you’re now dealing with debt from charges you didn’t authorize or services that were never delivered, understand that you have options. The Find Your Path quiz can help you explore what approaches might work for your situation.
Key Takeaways
- Payment processor Cliq allegedly violated its 2015 FTC settlement by processing for fraudulent merchants
- The FTC seeks $52.9 million in consumer relief and a permanent ban for the operators
- High chargeback rates are a warning sign that payment processors are supposed to heed
- Scam companies rely on willing payment processors to operate—holding enablers accountable matters
Frequently Asked Questions
What is Cliq and what did they do?
Cliq (formerly Cardflex) is a payment processor that handles credit card transactions for merchants. The FTC alleges they violated a 2015 settlement by processing payments for fraudulent companies instead of screening them out as required.
What is the MATCH list?
MATCH (Member Alert To Control High) is Mastercard’s list of merchants who have been terminated for violating card brand rules, including having excessive chargebacks. Payment processors are supposed to avoid working with MATCH-listed merchants.
Why do payment processors matter for consumer protection?
Payment processors are gatekeepers—they enable merchants to charge credit cards. When they screen for fraud and refuse to process for suspicious merchants, they can prevent scams before they happen. When they don’t, they enable consumer harm.
What should I do if I see unauthorized charges on my credit card?
Dispute the charge with your credit card company immediately. Federal law limits your liability for unauthorized charges. Also report the company to the FTC at ReportFraud.ftc.gov.
Can I get my money back from a fraudulent charge?
If you dispute unauthorized charges promptly with your credit card company, you’re generally protected. The FTC’s action against Cliq also seeks consumer relief, though individual recovery depends on the case outcome.
(Source: Federal Trade Commission)
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