A federal regulator has had to go to court simply to get a company to answer its questions. The Federal Trade Commission is investigating Block, the parent company of Square and Cash App, over complaints that the fintech giant freezes or shuts down customer accounts without warning, cutting people off from their own money with little recourse. The case has escalated to federal court in California, where the FTC is asking a judge to force Block to comply with document requests it says have gone unanswered for months.
What the Court Filing Reveals
According to the FTC's petition, filed on October 7, the agency first sent Block an administrative subpoena on January 22, with a compliance deadline of February 23. Months later, the commission says Block has still not verified its interrogatory responses or certified that its document production is complete. The filing states plainly that Block "has neither verified its completed interrogatory responses, nor certified the completeness of the document and data requests it has indicated are complete."
The requested material is broad: organizational charts, staff directories, loan offers and applications, internal complaint records, and the names of employees with direct knowledge of how frozen accounts are handled. The FTC also accuses Block of inadequate responses to a Civil Investigative Demand, a formal tool regulators use to gather evidence before deciding whether to bring an enforcement action.
Underlying the legal dispute is a striking number: the FTC says it has received more than 1,500 complaints from Square customers whose payment processing accounts were frozen or deactivated without prior notice. Since 2022, affected customers have reportedly been unable to access up to $2.5 million combined, according to the agency's own petition.
Fine Print That Gives Companies Wide Latitude
Much of this traces back to the terms of service that customers agree to, often without reading closely. Square's terms allow the company to "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." They also permit Block to delay payouts or restrict access to funds "if we need to conduct an investigation," and to impose a financial reserve "for any reason related to your use of the Services." Cash App's terms contain similarly expansive language, reserving the right to "hold your funds at our discretion to protect the Company or a third party."
These clauses are not unusual in the payments industry, where companies must guard against fraud, money laundering, and chargebacks. But critics argue that when the only recourse for a frozen account is a customer service line, the imbalance of power between a platform and an individual user becomes difficult to challenge. That tension is precisely what regulators now appear focused on.
A Pattern of Regulatory Friction
This is not Block's first encounter with scrutiny over account freezes. In 2025, the Consumer Financial Protection Bureau ordered the company to pay up to $120 million in redress to affected customers, along with a $55 million penalty. Three years earlier, in 2022, a federal court compelled Block to comply with a separate CFPB investigation into whether fintech firms were denying customers access to their funds or failing to resolve their complaints. In that earlier case, the presiding judge expressed open skepticism about Block's resistance, writing that the court was "confused why Respondent is opposed to enforcement of the Investigative Demands when it has directly stated that it will fully comply."
The current FTC inquiry also fits into a wider regulatory push. In March 2026, FTC Chairman Andrew Ferguson warned four other major payment companies - PayPal, Stripe, Visa, and Mastercard - that cutting off customers in ways inconsistent with their own terms of service, or with reasonable customer expectations, would invite scrutiny. Block, for its part, maintains it is cooperating. A company spokesperson said it has "been working in good faith with FTC staff to address the production of responses to the agency's handful of remaining requests" and remains "committed to working constructively with the Commission to bring about the closure of this matter."
Whatever the outcome, the case highlights a broader question facing digital payment platforms: as more commerce and personal finance move through apps controlled by private companies, how much unilateral power should those companies retain over access to a customer's own money?