Block, Inc., the financial technology firm behind Cash App, will pay $45 million to settle a multistate investigation into allegations that the company misled the public about its security measures and left users exposed to widespread fraud.
The settlement addresses accusations that Block aggressively promoted Cash App as a safe substitute for traditional banking while failing to protect consumers or provide legally required fraud resolution. According to investigators, the company actively encouraged users to set up direct deposits for paychecks and government benefits, specifically targeting unbanked and underbanked individuals who lacked traditional bank accounts.
State officials found that Block’s quick, “frictionless” account sign-up process featured minimal identity verification, allowing scammers to easily set up fraudulent accounts. Furthermore, for multiple years, Cash App lacked any telephone-based customer service.
Users locked out of accounts or seeking help often searched online and fell victim to fake 1-800 numbers operated by scammers who drained their balances. The company also continued its “Cash App Fridays” social media giveaways for years, despite knowing that fraudsters used the public promotion to trick contestants into revealing account credentials.
As a result of these practices, legitimate users who triggered automated security locks were routinely cut off from their money for weeks without a method for appeal. Additionally, the company failed to properly investigate unauthorized transactions or issue refunds mandated by law.
“Customer safety should always be a top priority, and when a company misleads and fails to protect its users from fraud, it must be held accountable,” Michigan Attorney General Dana Nessel said in a statement. “This settlement requires Cash App to maintain strong safeguards for consumers and commits the company to putting stolen money back into the pockets of Michigan residents. Throughout my time in office, we have worked with multistate coalitions to halt deceptive business practices, and we will continue to pursue corporations that try to put their bottom line over the people of Michigan.”
Under the terms of the settlement, Michigan is set to receive $936,540. Block has also agreed to a series of mandatory operational changes to improve consumer protection.
The company must now provide 24-hour live customer support, which includes ensuring a human representative is available via phone for at least 13.5 hours a day and through live chat for at least 18 hours a day. Block is also required to cease misleading claims regarding app safety, end marketing practices that increase fraud risks, directly educate its user base on common financial scams, and fulfill its legal obligations to investigate fraud claims and reimburse users for unauthorized transactions.
The agreement also reinforces a separate commitment by Block to distribute between $75 million and $120 million in consumer compensation nationwide, following a related enforcement action by the Consumer Financial Protection Bureau (CFPB).
In a statement to Tampa Free Press, a company spokesperson said: “We’ve reached an agreement that resolves a previously disclosed legacy matter that primarily relates to historical aspects of our business. Cash App has made significant investments in consumer protection, customer service, and compliance in order to safeguard and serve the tens of millions of Americans who rely on Cash App to meet their banking and credit needs. We share the commitment of the attorneys general to addressing industry challenges and continue to invest in operations and technology to promote a safe and healthy financial ecosystem.”
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