A Burlington business owner is suing the parent company for the widely-used online payment platform, Square, to recover alleged outstanding payments that she says were illegally diverted from her bank account.
The business owner, Karen Wilkinson, initially filed a lawsuit in Alamance County superior court against Block, Inc. the parent company for Square, to collect $122,854.73 in outstanding payments that were collected through her business and diverted to the “unknown owner” of a Wells Fargo Bank account during the second half of 2022.
The defendant, Block, Inc., was granted a motion in 2025 to transfer the case to the U.S. District Court for the Middle District of North Carolina. The case remains pending in both jurisdictions.
Payments from 804 transactions – totaling $160,779.43 in all – processed through Square were diverted from Wilkinson’s PNC Bank account to an unauthorized Wells Fargo Bank account between June 9 and December 16, 2022, according to her suit. Square is a digital payment platform that enables business owners to process payments, manage inventory, communicate with customers, book appointments, and manage their operations through any internet-connected device.
Court filings list the plaintiff as Dr. Karen Wilkinson, a “health and wellness services” provider. She is the owner and operator of Envision Wellness, a chiropractic practice that also offers other holistic wellness services, along Hanford Road in Burlington.
Square refunded Wilkinson $37,924.70 – representing about a month’s worth of transactions – but so far has refused to pay the remaining balance of $122,854.73, according to her suit.
Wilkinson contends that Square failed to take appropriate measures to prevent the diversion, notify her of the illegal transfer, or give her the name of the owner of the Wells Fargo Bank account to which her money was diverted, according to her lawsuit against the parent company for the online payment processing system.
The defendant, however, claims to be shielded from such litigation by the terms of service that any business owner is required to sign in order to set up an account with Square, based on a brief that Block, Inc. (“Block”) filed last year after the case was subsequently removed to the U.S. District Court for the Middle District of North Carolina. Block, the parent company for Square, is publicly-traded and has its principal place of business in California, according to federal court filings.
Block is asking a judge to pause the lawsuit and to force the parties to try to reach an out-of-court resolution, through arbitration proceedings to be overseen by an independent, third-party, such as a mediator, according to the federal court file.
In a motion to compel arbitration, Block asserts that its “General Terms of Service…contain a binding arbitration provision requiring arbitration of any ‘claim, controversy, or dispute relating in any way to these Terms of Service, or any other aspect of our relationship.’”
Block contends that, when Wilkinson set up her Square online account, she was required to enter an email address, create a password, and indicate the country in which she would be using Square’s services – and that, in agreeing to those terms of services, she also agreed to initiate arbitration to resolve any future claims that may arise against Square.
U.S. District Court judge David A. Bragdon earlier this year granted the defendant’s motion to compel arbitration, though that process has not yet begun, according to a joint status report that the attorneys for Wilkinson and Block filed in federal court in mid-June.
Neither the Alamance County nor the federal court file gives any indication that any patient data or patient financial information was compromised as a result of the alleged illegal diversion of funds.
The defendant contends that Wilkinson “seeks to hold Block liable for alleged criminal actions of an unidentified third party [that] gained access to her account without her knowledge or permission” and changed the bank account into which incoming payments were deposited, according to Block’s motion to compel arbitration.
Block has also requested dismissal of the federal suit, based on its claim that Wilkinson hasn’t identified any contractual provision requiring the company to safeguard funds or “disallow changes to account information.” Nor can the plaintiff show that Block’s actions were the “proximate” cause of the financial damages, the company asserts in its motion to compel arbitration.
Wilkinson is seeking an award for compensatory damages (and asking for the damages to be tripled) against Block, under three alleged causes of action, including: breach of contract by failing to safeguard her funds, causing $122.854.73 in financial damages; negligence by failing to implement adequate security measures to prevent unauthorized access to her account; and unfair and deceptive trade practices by failing to notify her of the diversion of funds and failing to return all funds.
The plaintiff is also requesting a judgment, declaring that Square’s terms of service do not shield the company from liability for diverted funds or unfair trade practices.
A hearing in the case is currently scheduled for August 17 in Alamance County superior court to determine the status of the case.
Block is being represented by the Burr & Forman law firm in Charlotte.
Wilkinson is being represented by the Kreider Law firm in Greensboro.
