Cash App owner Block to pay $45M to settle fraud protection claims by 46 states
The Cash App logo appears on the screen of a smartphone in Reno, United States, on November 30, 2024. (Photo by Jaque Silva/NurPhoto via Getty Images)
Block has agreed to pay $45 million and provide live customer support for its Cash App mobile payment service to settle allegations from 46 states that it failed to adequately protect users from fraud, state officials announced Wednesday.
Michigan is included in the settlement.
Cash App Block settlement
Dig deeper:
The multistate investigation alleged that the company misled customers by advertising protections similar to those offered by banks, including advanced fraud detection. Block denied any wrongdoing.
According to the states, Cash App experienced a surge in fraud over recent years, but the company focused on expanding its marketing instead of strengthening security measures. Investigators said users were able to create accounts without providing a Social Security number or date of birth and could open unlimited accounts, making it easier for scammers to operate.
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The states also alleged that Cash App's lack of a customer support phone number left many locked-out users searching online for help, where they instead encountered fraudulent customer service numbers operated by scammers.
What's next:
As part of the settlement, Block agreed to strengthen its fraud prevention efforts and customer service, including providing 24-hour support with live phone agents available for at least 13.5 hours each day.
Separately, Washington Attorney General Nick Brown announced Wednesday that Block agreed to a $20 million settlement to resolve the state's lawsuit alleging the company facilitated fraudulent unemployment insurance payments during the COVID-19 pandemic.
What they're saying:
Brown's office said Cash App processed at least $22 million in fraudulently obtained unemployment benefits over a five-month period in 2020 after criminals used stolen personal information belonging to Washington residents. The state alleged Block failed to maintain adequate anti-fraud controls. Block denied wrongdoing in court filings.
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In a statement provided through a spokesperson, Block said the multistate agreement "resolves a previously disclosed legacy matter that primarily relates to historical aspects of our business." The company added that Cash App has since made significant investments in consumer protection, customer service and compliance.
"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," the company said.
Big picture view:
The settlement includes every U.S. state except Hawaii, Missouri, South Carolina and Wyoming.
The backstory:
Last year, Block also agreed to pay up to $120 million, including $40 million to New York, to settle separate allegations from another coalition of states that Cash App failed to implement adequate anti-money laundering safeguards. Block denied wrongdoing in that case as well.
Michigan Cash App settlement
By the numbers:
Under the settlement, the State of Michigan will receive $936,540, the attorney general's office announced Friday.
The Source: Reuters contributed to this report. The information in this story comes from a Reuters report based on announcements from the multistate coalition of attorneys general involved in the settlement, including the Washington Attorney General's Office. This story was reported from Los Angeles.