Block Inc., the company behind the popular Cash App, has agreed to a $45 million settlement to resolve allegations that the company misled consumers about the app’s safety and didn’t provide fraud protection.
As a result of the settlement, Virginia will receive a $845,500 settlement payment, which the attorney general’s office can use for other efforts to protect consumers or other purposes permitted by state law.
If you’re wondering about the consumers who were misled and were perhaps defrauded as a result, there is something there.
The multistate settlement announced on Monday reaffirms Block’s commitment to distribute between $75 million and $120 million to compensate consumers nationwide as part of a previous settlement with the Consumer Financial Protection Bureau.
“Virginians deserve to trust that the companies they do business with are acting legally and with integrity, and when a company acts outside the law or unethically, this office will hold them accountable,” Attorney General Jay Jones said in a statement from a release sent out by his office on Monday.
“When companies strategically omit information and foster fraudulent practices, it hurts consumers and shakes confidence in our institutions. I want to assure Virginians throughout the Commonwealth that the OAG is using all available tools to protect them,” Jones said.
Background
For years, Block actively promoted direct deposits of paychecks and government benefits into Cash App. The company made a particular push to reach unbanked and underbanked consumers, people who would often rely on Cash App as their primary financial account, and who were especially vulnerable to fraud.
Among the problems with Cash App cited by the coalition of state AGs that pushed Block on this matter:
- 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 had won, and trick them into handing over their login information. Block knew about these scams and kept running the promotion anyway, for years.
In addition to the money
Under the settlement, Block has agreed to implement 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.
- Directly educate consumers about common types of fraud.
- Fulfill its legal obligations to investigate fraud claims and reimburse users for unauthorized transactions.
