Penalty Amount
$6,500,000
A federal court held Cliq Inc. and its executives Andrew Phillips and John Blaugrund in civil contempt for multiple violations of a 2015 FTC order requiring the payment processor to prevent enabling consumer fraud. The court found the defendants facilitated fraud by processing transactions for high-risk merchants, avoiding fraud monitoring, failing to conduct required underwriting, and ignoring chargeback thresholds. The court imposed $6.5 million in civil contempt sanctions against the defendants.
The U.S. District Court for Nevada imposed $6.5 million in civil contempt sanctions against Cliq Inc., formerly Cardflex Inc., and its operators Andrew Phillips and John Blaugrund for multiple violations of a 2015 federal court order, including facilitating fraud, failing to conduct required underwriting, and ignoring chargeback thresholds.
In-house teams should review vendor agreements with payment processors and merchant services providers, focusing on clauses related to underwriting requirements, chargeback thresholds, and fraud/risk monitoring obligations. Specifically, check for requirements that processors conduct mandatory business information verification, screen for shell companies, and comply with MATCH list (high-risk merchant) exclusions. Additionally, review clauses governing chargeback limits, mandatory reporting of suspicious merchant activity, and prohibitions on facilitating transactions for unverified or high-risk merchants. Merchant agreements should also be reviewed to ensure they require merchants to provide accurate business information and prohibit shifting transactions between closed and active accounts to evade monitoring.
Entity
Cliq Inc.
Industry
Financial ServicesOfficial Press Release
https://www.ftc.gov/news-events/news/press-releases/2026/05/federal-court-holds-payment-processor-cliq-contempt-violating-ftc-order
Cardflex ContemptOrder
https://www.ftc.gov/system/files/ftc_gov/pdf/Cardflex-ContemptOrder.pdf
Federal Trade Commission Enforcement Page
https://www.ftc.gov/enforcement
"Cliq Inc, formerly known as Cardflex Inc."
"$6.5 million"
"May 13, 2026"
"the court determined the defendants violated multiple core provisions of the 2015 federal court order by facilitating fraud on behalf of several scammers."
"the court imposed $6.5 million in civil contempt sanctions against the defendants."
"Assisted and facilitated two groups of merchants in avoiding fraud and risk monitoring programs, including by processing so-called “friendly” transactions to mask true chargeback rates and helping a group of merchants both process under different names and shift transactions from closed accounts to other live accounts."
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$1.9M
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