FTC Asks Court to Hold Payment Processors in Contempt, Seeks $52.9 Million for Consumers

The 2015 FTC order (in the CardFlex / I Works case) required Cliq’s predecessors and principals (CardFlex, Andrew Phillips, and John Blaugrund) to:

• Stop processing payments for certain high‑risk or deceptive merchants, and stop acting as a payment processor/independent sales organization/sales agent for specified categories of merchants.
• Stop helping clients evade bank and card‑network fraud‑ and risk‑monitoring programs.
• Implement safeguards: screen prospective high‑risk clients, monitor existing clients’ sales and transaction activity for signs of deception (like high chargebacks), and terminate clients engaged in deceptive conduct.

The 2026 motion describes this as an order requiring them to take “reasonable steps to prevent and detect fraud.”

Being held in contempt of a court order means the judge formally finds that a person or company disobeyed a previous court order.

In this context, the FTC is asking for civil contempt, which is used to:

• Compensate people harmed by the violation (here, at least $52.9 million for consumers), and
• Coerce future compliance (for example, by changing the order, banning people from an industry, or appointing a receiver to take control of a business).

The FTC’s motion specifically asks the court to: (1) award at least $52.9M in compensatory relief to consumers, (2) permanently ban Phillips and Blaugrund from the payment‑processing business, and (3) appoint a receiver over Cliq to enforce compliance with the 2015 order.

According to the FTC:

• Cliq, Inc. is the payment‑processing company formerly known as CardFlex, Inc. that provided merchants access to Visa/Mastercard and banking networks.
• Andrew Phillips was CardFlex’s CEO and is now Cliq’s CEO.
• John Blaugrund was CardFlex’s Executive Vice President of Operations and is now Cliq’s Chief Technology and Security Officer.

In the original 2014–2015 I Works case, CardFlex and its principals (Phillips and Blaugrund) allegedly helped a scam operation (I Works) obtain and maintain merchant accounts and process more than $26 million in unauthorized charges. The 2015 order resolved those charges and imposed the ongoing duties that FTC now says Cliq, Phillips, and Blaugrund violated.

The FTC alleges that Cliq, Phillips, and Blaugrund “illegally processed credit card payments” by ignoring explicit limits in the 2015 order and basic fraud‑prevention duties. Specifically, the FTC says they:

• Processed hundreds of millions of dollars in transactions for at least three merchants on Mastercard’s MATCH list, which flags merchants terminated for serious violations like excessive chargebacks.
• Processed payments for companies the 2015 order expressly prohibited them from serving, including merchants later criminally indicted.
• Helped clients evade bank and card‑network fraud and risk‑monitoring programs (for example, by assisting tactics to avoid being flagged for high chargebacks).
• Failed to reasonably screen and monitor high‑risk clients to see if their practices were deceptive, and kept processing for clients with very high chargebacks without first determining those clients were not engaged in deception.

These actions allegedly violated both card‑network rules and the specific fraud‑prevention obligations in the 2015 order.

Publicly available documents do not give a detailed formula for how the FTC calculated the $52.9 million figure. The 2026 press release only states that the FTC asked the court to impose “at least $52.9 million in compensatory relief for consumers,” implying it is meant to approximate consumer losses tied to the alleged unlawful processing after the 2015 order.

If the court grants the motion, those funds would be ordered as compensatory relief for injured consumers. In similar FTC cases, the agency typically distributes such money through its refund‑program process to consumers who were charged by the affected merchants, but the exact refund plan in this contempt proceeding has not yet been specified publicly.

The contempt motion was filed in the U.S. District Court for the District of Nevada, in the same CardFlex / Cliq case (FTC v. CardFlex, Inc., et al., No. 3:14‑cv‑00397).

As of the latest public information (the January 13, 2026 filing), no specific timetable for hearings or a final decision has been announced, so the precise timeline for the case is not yet publicly known.