FTC investigating Block over frozen Square, Cash App accounts

Block Inc., the parent of Square and Cash App, is under investigation by the Federal Trade Commission over whether it violated consumer protection laws by failing to adequately help customers with frozen or deactivated accounts, according to Bloomberg .

Court filings made public late Wednesday revealed the FTC's probe, with the agency asking a judge to require Block to hand over documents. The agency began the investigation last year and sent a demand for records in January, according to Bloomberg. The case is FTC v Block, 26-mc-80299, U.S. District Court, Northern District of California (Oakland).

According to Bloomberg, the FTC's petition described consumer allegations that Square accounts were frozen or deactivated, leaving customers unable to reach funds totaling up to $2.5 million since 2022. Block did not give customers meaningful assistance, the filings indicated, even in cases where those customers had already completed identity and bank account verification steps.

Block said in a statement that it has been working with FTC staff on the matter. "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 company said. "We remain committed to working constructively with the commission to bring about the closure of this matter." The FTC did not respond to a request for comment, according to Bloomberg.

Bloomberg noted that although large portions of the court documents remain redacted, the FTC's complaint drew attention to Block's earlier announcement of a 4,000-person workforce reduction alongside a broad integration of artificial intelligence across the company.

Block cut more than 40% of its staff in early 2026 , with Jack Dorsey, Block's founder, framing the reduction as a deliberate embrace of AI rather than a response to financial distress. The cuts drew accusations from critics who questioned whether AI genuinely justified cuts of that scale and charged that Block was hiding poor business performance behind an AI narrative, a practice sometimes labeled AI washing. Block has said its use of AI tools has made staff more productive and enabled new products and services.

The company reported strong financial results in the second quarter, posting 25% gross profit growth year over year and an all-time high adjusted operating income margin of 27%. Block's second-quarter gross profit reached $3.17 billion, with Cash App gross profit growing 31% year over year to $1.97 billion and Square gross profit growing 13% to $1.16 billion.