U.S. District Judge Miranda Du of the District of Nevada fined payments processor Cliq $6.5 million last week for violating a 2015 Federal Trade Commission consent order, finding “clear and convincing evidence” that the company processed payments that breached the decree.
The original 2015 settlement resolved FTC charges that Cliq, then operating as CardFlex, had processed about $26 million in unauthorized consumer charges. The accompanying consent order addressed allegations that the company processed payments for merchants on Mastercard’s Member Alert To Control High-risk Merchants (MATCH) list and failed to screen clients with elevated chargeback rates.
The FTC had sought $52.9 million in compensatory relief — the amount Cliq processed for Target Fulfillment, a company named in the litigation. Judge Du found $6.5 million “commensurate with the harm.” She didn’t stop there: Du also rejected the FTC’s request to appoint a receiver and declined to ban CEO Andy Phillips and CTO John Blaugrund from the industry.
Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, said the court confirmed Cliq’s violations “facilitated millions of dollars of fraud.” Cliq’s president and CFO Joanna Oliva called it a victory anyway, saying the court “rejected what we always perceived as a massive overreach” by the agency.
Cliq, based in Costa Mesa, California, serves about 75,000 merchants and says it’s spent roughly $10 million over the past five years on compliance. That’s more than the fine.
James Okafor