WASHINGTON, D.C. — A federal judge in Nevada ordered payment processor Cliq Inc. and two executives to pay $6.5 million in civil contempt sanctions after finding the company violated a long-standing federal order intended to prevent payment networks from facilitating consumer fraud schemes.
The ruling, entered May 13 by the U.S. District Court for the District of Nevada, found Cliq Inc., former executive Andrew Phillips, and executive John Blaugrund violated key provisions of a 2015 federal court order obtained by the Federal Trade Commission.
According to the court, the company processed hundreds of millions of dollars in transactions for merchants listed on Mastercard’s MATCH database, a network-wide monitoring system used to identify high-risk merchants associated with excessive fraud, chargebacks, or illegal activity.
The court also found the defendants helped certain merchants evade fraud-detection and risk-monitoring systems by disguising chargeback activity and shifting transactions between accounts after prior accounts were shut down.
In one instance cited by the court, the defendants allegedly processed “friendly” transactions designed to artificially suppress reported chargeback rates — a metric closely monitored by banks and card networks as an indicator of fraud risk.
The ruling further found the company failed to conduct required underwriting reviews mandated under the 2015 order, including verifying business records, investigating suspected shell companies, and reviewing what the court described as “obviously false” websites submitted with payment-processing applications.
The court additionally concluded Cliq continued processing payments for merchants that repeatedly exceeded allowable chargeback thresholds without conducting required investigations or filing mandated compliance reports.
FTC Bureau of Consumer Protection Director Christopher Mufarrige said the ruling reflects increased scrutiny of intermediaries that enable fraudulent payment activity.
“As the court concluded, Cliq and its executives assisted and facilitated scammers in avoiding fraud and risk monitoring programs and failed to conduct the 2015 order’s required underwriting,” Mufarrige said.
The sanctions stem from a civil contempt action tied to a settlement the defendants previously agreed to with the FTC in 2015. The agency argued the company systematically ignored compliance obligations imposed under that order while continuing to service high-risk merchants.
The case highlights growing regulatory pressure on payment processors and merchant-acquiring firms, which federal regulators increasingly view as critical gatekeepers in preventing online fraud and deceptive commerce activity.
Support the local news that supports Chester County. MyChesCo delivers reliable, fact-based reporting and essential community resources—free for everyone. If you value that, click here to become a patron today.