Payment UpdateWeek of Oct 19
Paid is not the same as reaching your money. What to set up before a processor holds your funds
TL;DR
In court filings reported October 8, the FTC asked a federal court to make Block hand over records on frozen and deactivated Square accounts, citing more than 1,500 complaints and up to $2.5 million in restricted funds since 2022. It is an investigation, not a finding. Every processor can hold funds. Here is what to have in writing before one does.
What happened
Court filings reported on October 8 show that the Federal Trade Commission is investigating Block, the parent of Square and Cash App, over how it handled frozen and deactivated accounts. The FTC asked the U.S. District Court in Oakland to compel Block to hand over documents it requested in January. The case is FTC v. Block, 26-mc-80299.
According to the filings, as reported by Bloomberg and Quartz, the agency received more than 1,500 complaints from Square customers whose accounts were frozen or deactivated, in some cases after the customer had already completed identity and bank account verification. The filings put the restricted funds at up to $2.5 million since 2022. The FTC says Block did not give those customers meaningful assistance.
Block said it has been working in good faith with FTC staff on the remaining requests and remains committed to closing the matter. Two things to keep straight: this is an investigation, not a finding of wrongdoing, and the $2.5 million is the amount in the filing, not a court-confirmed loss.
What it means for you
For a small restaurant or a food truck, the processor account is not just where card money lands. It is the cash flow. A hold can arrive after a sales spike, a run of chargebacks, a new product line, or a verification request you did not see. The sale is complete, the guest has eaten, and the money is in a review queue.
Picture a food truck that sold $20,000 this month with payroll due Friday. (That figure is an example, not a case from the filing.) The hold itself is not the scandal. Processors hold funds for real reasons, and most holds end. The problem is finding out on Thursday that no one answers, that the review has no stated end date, and that the person who sold you the account cannot reach the person who placed the hold.
What to do
Get three things in writing from your processor before you need them:
1. What triggers a hold. Volume spikes, chargeback ratios, new categories, and verification gaps are the usual list. Ask for yours. 2. How long a review can take, and who can shorten it. A policy that says "up to 90 days" is a policy; "we will get back to you" is not. 3. A phone number that reaches a person, with hours. Then call it once before anything is wrong, so you know what happens when you do.
And keep two weeks of payroll in a bank account your processor does not control. If your current provider cannot answer the first question, that is the answer.
Questions owners ask
Has Block been found to have broken the law?
No. The FTC is investigating and has asked a court to compel documents. Block says it is working in good faith with the agency. An investigation is not a finding, and the $2.5 million is the figure in the filing, not a court-confirmed loss.
Why would a processor hold my money?
The usual triggers are a sales spike, a run of chargebacks, a new product category, or a verification gap. Every processor has a hold policy. Ask for yours in writing before you need it.
What should I have ready before a hold happens?
Three things in writing: what triggers a hold, how long a review can take, and a phone number that reaches a person. Plus two weeks of payroll in a bank account your processor does not control.
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