Dive Brief:

• The Federal Trade Commission sought this week to hold the payments processor Cliq and two of its top executives in contempt of a 2015 court order, saying in a Tuesday press release they had continued to process payments for indicted merchants.
• The federal agency filed a motion in the U.S. District Court for Nevada to force the company, formerly known as CardFlex, to pay $52.9 million in compensatory relief to consumers damaged by the company’s activities.
• “Cliq and its operators flagrantly violated an FTC order requiring reasonable steps to prevent and detect fraud,” the FTC’s director of the bureau of consumer protection, Christopher Mufarrige, said in the Tuesday release. “We will not hesitate to hold accountable companies that ignore red flags and distort the honest functioning of the U.S. payment system.”

Dive Insight:

The Federal Trade Commission filed the contempt request with the court Tuesday, after an initial request last month.

“The FTC alleged that Cliq violated numerous provisions of the 2015 order while processing for companies expressly prohibited by the order,” according to the release. “This includes a group of merchants that have separately been indicted for crimes related to this processing.”

The Cliq executives named in the order filed this week are CEO Andrew Phillips and Chief Technology and Security Officer John Blaugrund. They couldn’t immediately be reached for comment and lawyers listed in the court docket as their counsel didn’t immediately respond to requests for comment.

In addition to the request for compensatory relief, the FTC asked the court to permanently bar Phillips and Blaugrund from payments processing and to appoint a receiver for Cliq that can ensure the company complies with the 2015 court order. 

In the court request this week, the federal agency alleged Cliq had continued to work with merchants that might be suspected of deceptive practices. 

Specifically, the FTC said that Cliq had processed millions of dollars in payments for potentially high-risk merchants on Mastercard’s Member Alert To Control High (MATCH) list. The agency also alleged Cliq facilitated its customers’ efforts to avoid bank and card network fraud monitoring safeguards and didn’t sufficiently screen high-risk clients, like those with high chargeback rates.

The 2015 order followed an FTC settlement in which the company and the two executives settled charges that they had illegally processed about “$26 million in unauthorized consumer charges on behalf of a company called I Works,” according to a March 2015 press release.

A spokesperson for Mastercard didn’t immediately have a comment on the latest FTC action.