Commonwealth to receive more than $1.1M for future public protection efforts
HARRISBURG – Attorney General Dave Sunday announced a $45 million multistate settlement with Block, Inc., the owner of popular peer-to-peer payments app Cash App.
The settlement resolves allegations that Block misled consumers about the safety of Cash App, failed to protect users from fraud on the platform, and did not provide the fraud protection and dispute-resolution services it promised and was required by law to provide.
Block told Cash App users their money was safe – implying that the platform offered protections similar to those provided by traditional banks. At the same time, Block knew fraud on its platform was rising sharply – and instead of warning users or strengthening protections, continued aggressively marketing its services.
“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,” Attorney General Sunday said. “The changes required under this settlement will strengthen consumer protections and improve the ability of users to report and resolve fraud.”
Under the terms of the Consent Petition for Final Decree between Block and the Commonwealth of Pennsylvania, the Commonwealth will receive $1,137,695.72 to be used for future public protection and educational purposes.
For years, Block actively promoted direct deposits of paychecks and government benefits into Cash App, particularly targeting unbanked and underbanked consumers – people who would often rely on Cash App as their primary financial account. According to the states, Block grew its user base without making sure it could support those users when problems arose.
Some of the shortcomings found on CashApp were:
- 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 and kept running the promotion anyway, for years.
Block’s failure to provide adequate customer service and to fulfill its promise to protect users from fraud had real consequences for real people. Users who experience 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 due to Block’s failure to investigate unauthorized transactions and to issue refunds when required by law.
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.
The multistate settlement also 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 regarding the CFPB’s settlement is available at: https://www.consumerfinance.gov/enforcement/actions/block-inc/ and https://cashappcfpbsettlement.com/.
The Consent Petition was filed in the Philadelphia Court of Common Pleas by Debra Djupman Warring and is pending approval by the Court.
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