Block Inc. has agreed to pay $45 million to settle allegations from 46 states that it misled Cash App users about the platform's security and failed to adequately protect them from fraud.
The company denied wrongdoing but agreed to strengthen fraud prevention, provide live 24/7 customer support, and improve how it handles unauthorized transaction claims.
The settlement comes on top of a separate agreement with the Consumer Financial Protection Bureau that provides between $75 million and $120 million in redress for eligible Cash App users.
Block Inc., the parent company of Cash App, has agreed to pay $45 million to resolve allegations by a bipartisan coalition of 46 state attorneys general that it misled consumers about the security of its popular peer-to-peer payment platform and failed to adequately protect users from fraud.
The settlement follows a multistate investigation that alleged Block marketed Cash App as offering protections comparable to those of traditional banks while allowing security weaknesses that made it easier for scammers to exploit the platform. State investigators claimed the company did not provide the fraud protections and customer assistance that consumers were led to expect.
According to the states, Cash App allowed users to open accounts with minimal identity verification, including in some cases without providing a Social Security number or date of birth. Investigators also alleged there were insufficient limits on the number of accounts an individual could create, making it easier for fraudsters to operate on the platform.
Focus on customer service
Another focus of the investigation was customer service. Attorneys general said Cash App did not provide an official customer support telephone number for years, forcing locked-out users to search online for help. Many instead encountered fake customer service numbers operated by scammers, resulting in additional financial losses.
The states also alleged that Block continued aggressively marketing Cash App, including encouraging consumers to receive paychecks and government benefits through the service, even as fraud on the platform increased. Officials said those practices disproportionately affected unbanked and underbanked consumers who relied on Cash App as a primary financial account.
Better customer service
As part of the settlement, Block agreed to implement a series of reforms designed to better protect customers. Those changes include offering live customer support around the clock, improving fraud detection and prevention systems, complying with laws governing reimbursement for unauthorized transactions, and eliminating marketing that could mislead consumers about the platform's security protections.
Block denied the allegations and did not admit liability as part of the agreement.
The multistate settlement is separate from a Consumer Financial Protection Bureau case announced earlier. Under that agreement, Block is providing between $75 million and $120 million in compensation to eligible Cash App users in addition to regulatory penalties. Some affected customers have already begun receiving payments through that separate CFPB settlement.
The case reflects increasing regulatory scrutiny of peer-to-peer payment services as millions of Americans use apps such as Cash App, Venmo and Zelle for everyday financial transactions. Regulators have argued that fintech companies offering bank-like services must also provide robust consumer protections against fraud and unauthorized transactions.