Block, the company behind the peer-to-peer payments app Cash App, has resolved allegations the company misled consumers about Cash App’s safety. It failed to protect users from fraud, and didn’t meet its own promises to consumers and obligations under the law, according a multistate coalition of attorneys general.
“CashApp knew peer-to-peer payment apps were prime targets for fraudsters, and instead of taking extra steps to safeguard their platform, they misled and deceived consumers about protections being offered,” Pennsylvania Attorney General Dave Sunday said in a statement. “The changes required under this settlement will strengthen consumer protections and improve the ability of users to report and resolve fraud.”
The multistate settlement, which was led by the attorneys general of Oregon and Texas, reaffirms Block’s commitment to distribute between $75 million and $120 million to compensate consumers nationwide as part of a settlement with the Consumer Financial Protection Bureau. Additional information about the CFPB’s settlement is available by calling the Cash App call center at 888-832-1301.
The multistate coalition alleged that Block told Cash App users their money was safe, implying that the app worked like a bank with the same protections, which wasn’t true. At the same time, Block knew fraud on its platform was rising sharply and instead of warning users or strengthening protections, it doubled down on marketing.
Block’s policies didn’t just fail to stop fraud in several ways, the settlement said, they made it easier:
- Block’s sign-up process was designed to be fast and frictionless, with minimal identity verification. That made it easy for fraudsters to create accounts, not just legitimate users.
- For years, Cash App had no phone support. Users who needed help could only message through the app or on social media. People who got locked out, or just wanted to talk to someone, searched online for a phone number and often ended up calling fake 1-800 numbers run by scammers posing as Cash App. Those scammers would then take over accounts or drain users’ other financial accounts. Block knew this was happening and didn’t warn users or set up a real phone line until years later.
- Block ran a social media promotion called Cash App Fridays, encouraging users to publicly post their $cashtag – a unique Cash App identifier – for a chance to win a weekly prize. Fraudsters would then contact those users, tell them they’d won, and trick them into handing over their login information. Block knew about these scams for years and kept running the promotion anyway.
Block’s failure to provide adequate customer service and to fulfill its promise to protect users from fraud had consequences for people’s finances, according to the settlement. Innocent users who experienced automated account locks for suspicious transactions were frequently locked out of their accounts for weeks without a way to access their money.
Victims of fraud through the app were often left with no recourse, because delays made it impossible to get stolen money back from scammers and because Block failed to investigate unauthorized transactions and failed to issue refunds when required by law, the settlement said.
Under the settlement, Block has agreed to carry out and maintain responsible practices to resolve these issues, including to:
- Maintain customer support that can resolve fraud complaints, account lockouts, and other problems.
- Offer live support 24 hours a day, with a human available by phone at least 13.5 hours a day and by live chat at least 18 hours a day.
- Stop making false or misleading claims about Cash App’s safety and how it protects users from fraud.
- Discontinue marketing practices known to increase fraud on the platform.
- Educate consumers directly about common types of fraud.
- Fulfill its legal obligations to investigate fraud claims and reimburse users for unauthorized transactions.
