Block agrees to answer FTC questions on 1,500 frozen Square accounts by year-end

Block▼−0.09% — Block, down 0.09 percent today has stopped fighting the Federal Trade Commission. In a joint filing in San Francisco federal court on November 6↗, the payments company behind Square and Cash App agreed to answer the regulator's questions about Square accounts it allegedly froze or deactivated without notice, handing over records in three batches through year-end ¹.

What that filing opens is a cost question. Block↗ has already accrued $764 million for a Justice Department deferred-prosecution deal↗, a pact that defers a criminal charge for three years in exchange for compliance terms, over anti-money-laundering failures at Cash App ², and that payment may be the first of several.

Sellers' money, and decks Block wants sealed

The FTC's October petition↗ says about 1,500 merchants complain that Block froze or deactivated their Square accounts without notice ¹. The agency says at least $2.5 million of their proceeds has been withheld since 2022, and calls the losses possibly "just the tip of the iceberg" because only a small fraction of injured consumers complain to the government ¹. Block disputes the allegations without admitting them. In the same case, it asked the court to seal the presentations it gave its own directors and senior executives on fraud prevention and risk management, arguing that disclosure would cause it "particularized business harm" ¹.

The teams that review disputes were cut twice

The FTC will read those records against a staffing story its own petition flagged. Block cut more than 40% of its staff in February, a reduction founder Jack Dorsey attributed to AI tools changing how the company runs, and a second round this month named Customer Ops and Risk Ops among the teams affected↗ ³. The staff email for that round spoke of "using better tools to handle routine tasks" and "refocusing our teams' time on complex cases and decisions" ³. The FTC's petition itself drew attention to the reduction and the company-wide AI push ⁴.

No filing says the cuts caused the frozen accounts. But if routine work now runs through tools while fewer people handle the complex cases, disputes like these merchants' would be expected to sit unresolved for longer, and that is what the documents due this month will be searched for.

What is booked, and what is not

Block says losses beyond its Justice Department reserve are "reasonably possible" ². On November 10, a $150 million settlement moved for preliminary approval in a private suit↗ ⁵. It alleges compliance failures let illicit activity run on Cash App ⁵. The FTC's demand is the third government demand on Block since 2021, after requests from the Consumer Financial Protection Bureau and the Washington state attorney general ¹. The documents also arrive while Block pursues an industrial bank charter for a unit it calls Builders Bank; bank regulators weigh compliance history in charter decisions ⁶.

None of this has dented the business. Shares jumped after third-quarter results beat expectations and Block raised its full-year outlook↗ ⁷.

The dates that decide the next number

Block answers the FTC's 47 interrogatories and delivers its first document batch by November 13, a second submission by November 30, and everything the search terms catch by year-end ¹. The court also has the request to seal the board decks to rule on. What Block told its directors about fraud prevention, set against what those sellers say happened to their money, is where the next number comes from.