Square Suspended a Verified Business Without Explanation or Reason

A small marketing and search engine optimization firm did everything right. It provided its identity. It linked a valid bank account. It submitted the Employer Identification Number document straight from the Internal Revenue Service. It used third party software to connect the bank account to the Square account. It produced the Limited Liability Company formation documents. It held a valid contract with the client for the full sum of the money.

And Square suspended it anyway.

The suspension was not because the business was missing a document. It was not because the bank account failed verification. The IRS did not say the EIN was fake. Square relied on a rule that did not even appear on its list of reasons for suspension. The business did not break a rule. The rule did not exist. But the automated system had made its decision, and the system does not take questions.

So the business appealed. Square promised a response in ten days. It took two weeks. When the response finally arrived, it was a denial. There was no explanation. There was no reason. There was no human being to call, no office to walk into, and no face to look at while they told you that your money and your business were no longer welcome.

Just a denial. From a machine.

You gave them your identity. You gave them your tax documents. You gave them your bank account. You gave them the contract proving the money was real and the client was real. In return, you got a suspension with no reason and an appeal with no explanation.

Here is the part that should make every small business owner in the country angry. It is written in Square’s own contract, in their own words, on their own website.

Square’s General Terms of Service, Section 12, state this: "We may 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."

At any time. For any reason. The reason is optional.

And Section 13, the Effect of Termination, says: "We will not be liable to you or any third party for compensation, reimbursement, or damages for any termination or suspension of the Services."

They can take your account, hold your money, and break your business, and they will not be liable.

Their Payment Terms, Section 12, say: "We may defer payout or restrict access to your Proceeds, temporarily or indefinitely."

Temporarily or indefinitely. Your money, your revenue, the money your client already paid, sits in a company’s account while a machine decides your fate.

And Section 14, the Reserve for Holding Funds, says: "We may require a Reserve for any reason related to your use of the Services. The Reserve will be in an amount as reasonably determined by us."

Reasonably determined by us. Not by a bank. Not by a regulator. Not by a judge. By us.

Here is the funniest part of the whole story. Square’s Payment Terms, Section 1, open with a confession: "We are not a bank."

They say it themselves. They are a payment facilitator. A processing company. A software as a service platform that takes the payment and moves the money. They are the pipe, not the reservoir. And yet this pipe has more power over your business than the bank that actually holds your money. The bank has to follow rules. The bank has to explain itself. The bank can be regulated. Square is a software company with a suspension button, and the button has no off switch.

And when you try to fight them, the contract is waiting. Section 22 of the General Terms says no class actions, no jury, individual arbitration, in Oakland, California. Section 19 says their total liability to you is capped at the fees they earned from you in the three months before the problem, or $500, whichever is greater.

Five hundred dollars. That is the most your business is worth to them, according to their own contract.

And Section 7 says that if there is ever a dispute about who owns your account, "we will be the sole arbiter of such dispute in our sole discretion. Our decision will be final and binding on all parties."

They are the player, the referee, and the stadium.

This is the world we have allowed to consume our society. A company that is not a bank, acting like one. An automation system that scrutinizes a business with zero reason and zero explanation. A merchant who did everything right, verified at every step, suspended by a rule that was not even a reason for suspension. An appeal that took twice as long as promised and died without a word.

And the business cannot dispute it, because to dispute it is to arbitrate, in their city, under their rules, for a prize capped at five hundred dollars.

Square even has a list of "Unsupported Industries" in its Payment Terms, and on that list, item 6, is "direct marketing or subscription offers or services." A marketing and search engine optimization firm is one algorithmic mood away from that list. The machine does not need the rule to be true. It needs the rule to be convenient.

Where is the bank that has to explain itself? Where is the regulator that has to show its work? Where is the human being who has to look you in the eye and say, we suspended you, and here is why?

There is no one. There is a dashboard. There is a denial. There is a machine that has never met your business, never read your contract, never spoken to your client, and has already decided.

This is not a payment processor. This is a toll booth on the only road your business has, run by a company that is not a bank, governed by a contract that says they can do whatever they want, whenever they want, for any reason, and owe you nothing for it.

The verified business did everything right. Square did not need it to.

That is the whole story. That is the whole system. And until a company that is not a bank starts acting like one, every small business in the country is one algorithm away from losing its money, its account, and its voice, with no reason given and no explanation owed.

We deserve better than a machine that suspends us and never has to explain itself.