FTC v. Cliq Inc. d/b/a Cardflex Inc.

Cliq Inc., formerly known as Cardflex Inc., and its operators Andrew Phillips and John Blaugrund, allegedly violated a 2015 federal court order designed to prevent the company from enabling consumer fraud. The court determined the defendants violated multiple core provisions of the 2015 federal court order by facilitating fraud on behalf of several scammers. This appears to include unlawfully processing hundreds of millions of dollars in transactions for merchants that were on Mastercard’s Member Alert To Control High-risk merchants (MATCH) list. They also allegedly 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. Further, they failed to conduct required underwriting, neglecting to collect or verify mandatory business information, ignoring evidence of shell companies, and waiving documentation requirements, accepting “obviously false” websites listed on payment processing applications “that they failed to further investigate.” Additionally, they processed for merchants that “consistently exceeded” the court order’s chargeback thresholds and failed to conduct required investigations or produce written reports to justify processing, despite red flags. The court found the defendants had “systematically failed to complete [their] reporting obligations” under this portion of the order.

Summary generated from official Federal Trade Commission press release