FTC Probes Block After Consumer Complaints Over Frozen Accounts

The Federal Trade Commission is investigating whether Block Inc., the parent of Square and Cash App, violated US consumer protection laws by failing to provide adequate customer service to help with frozen or deactivated accounts amid significant cuts in staffing.

The antitrust and consumer protection agency disclosed the probe in court filings late Wednesday seeking a judge’s order to force the digital payments company to turn over documents. The FTC began its investigation last year and sent a demand for records in January after receiving more than 1,500 consumer complaints, according to the filings.

Consumers alleged Block froze or deactivated Square accounts, preventing them from accessing or transferring as much as $2.5 million since 2022, the FTC said in its petition to enforce a civil investigation demand. The company failed to provide adequate customer service help when requested, even after customers responded to questions to verify bank accounts or their identity, according to the filings.

“We have been working in good faith with FTC staff to address the production of responses to the agency’s handful of remaining requests,” Block said in a statement. “We remain committed to working constructively with the commission to bring about the closure of this matter.”

The FTC didn’t immediately respond to a request for comment.

While much of court documents are redacted, the FTC’s complaint highlighted Block’s February announcement that it planned to lay off 4,000 employees and weave artificial intelligence into almost every aspect of its operations to improve results.

The layoffs led to public allegations that Block was engaged in so-called AI washing — using the new technology as an excuse to reduce headcount because business is going poorly. The company says its embrace of AI tools has made staff more productive, while also allowing Block to offer new products and services to customers that rely on the technology as well.

The case is FTC v Block, 26-mc-80299, US District Court, Northern District of California (Oakland).