The Federal Trade Commission (FTC) is investigating Block, the parent company of Square and Cash App, to determine whether it is in violation of consumer protection rules.
The investigation came to light as the FTC had to go to federal court in California to make the fintech giant hand over documents, as it had not fully complied with an earlier request.
“Block has neither verified its completed interrogatory responses, nor certified the completeness of the document and data requests it has indicated are complete,” the FTC filing said.
The court filing reveals that the FTC received over 1,500 complaints from Square customers who said the company was freezing or deactivating their payment processing accounts without prior notice, and leaving them without access to their money, or any meaningful way to remedy the situation.
The FTC’s petition says that customers who had their accounts frozen on Square since 2022 have not been able to access up to $2.5 million.
The petition, which was filed on October 7, states that the FTC first sent an administrative subpoena to Block on January 22, and that the company has not fully complied with it, despite the deadline being set for February 23.
The information the FTC is looking for includes organizational charts, staff directories, as well as loan offers, applications, and complaints. The regulator also wants to know the names of employees who have first-hand knowledge of the case.
The FTC also criticizes Block for not properly responding to its Civil Investigative Demand, and not handing over all the documents the regulator asked for.
A Block spokesperson says the company has been cooperating with the investigation.
“We have been working in good faith with FTC staff to address the production of responses to the agency’s handful of remaining requests,” the spokesperson said. “We remain committed to working constructively with the Commission to bring about the closure of this matter.”
Square’s own terms of service state that the company can “terminate these General Terms or any Additional Terms, or suspend or terminate your Square Account or your access to any Service, at any time for any reason.”
In addition, the terms say that the company may “defer payout or restrict access to your Proceeds, temporarily or indefinitely, if we need to conduct an investigation” and that it “may require a Reserve for any reason related to your use of the Services.”
The same is true of Cash App, whose terms state: “We reserve the right to hold your funds at our discretion to protect the Company or a third party.”
The company has a history of being ordered to improve the way it treats customers whose accounts have been locked, and in 2025, the Consumer Financial Protection Bureau (CFPB) ordered it to pay up to $120 million in redress and a $55 million penalty.
In 2022, a federal court ordered Block to comply with a CFPB investigation into whether fintech companies were depriving customers of access to their funds, or failing to address their concerns.
The judge in that case noted that Block was opposing the investigation, even though it had said it would comply with it. “The Court is confused why Respondent is opposed to enforcement of the Investigative Demands when it has directly stated that it will fully comply,” the ruling said.
In March 2026, FTC Chairman Andrew Ferguson sent a warning to four other payment companies - PayPal, Stripe, Visa, and Mastercard - that they must not cut customers off from their services in a way that is inconsistent with the companies’ own terms of service or a customer’s reasonable expectations.
When a payment company can freeze your money “at any time for any reason” – and that is exactly what Square’s terms say – the only appeal is a customer service line, and that is what the FTC is now asking about.
