The CFPB fined Block, the parent company of Cash App, \$120 million for failing to protect users from fraud and for inadequate response to complaints. The company was accused of using weak security protocols and directing victims to seek refunds from their banks, which were subsequently denied.
The parent company of Cash App , a popular peer-to-peer payment platform, has been ordered to pay up to \$120 million to victims of fraud, along with a \$55 million penalty, according to the Consumer Financial Protection Bureau ( CFPB ) announcement this week. The CFPB stated on Thursday that Block , the parent company of Cash App , employed 'weak security protocols' for the platform, leaving its users vulnerable to risks.
The CFPB emphasized that Block is legally obligated to investigate and resolve disputes concerning unauthorized transactions. However, the company's investigations were deemed 'woefully incomplete.' The bureau alleged that Cash App users who fell victim to fraud were directed by Block to request chargebacks from their banks, which Block would subsequently deny. Block was also accused of implementing various tactics to discourage Cash App users from seeking assistance, ultimately reducing its own costs. In response to the allegations, Cash App stated its commitment to providing a secure and safe user experience, alongside continuous self-assessment to enhance its platform. The company acknowledged the 'unprecedented growth' it experienced during the pandemic, as millions adopted the platform. This rapid expansion, Cash App explained, placed an unprecedented strain on its customer service, leading to investments in customer support and scam prevention measures. While expressing disagreement with the CFPB's characterization of events, Cash App opted to settle the matter to focus on its customer and business interests. Cash App, one of the leading peer-to-peer payment platforms in the U.S. with over 56 million accounts, facilitates electronic money transfers, direct deposits, and prepaid card usage for purchases and ATM withdrawals.As part of the agreement with the CFPB, Block is required to pay up to \$120 million in refunds and other remedies to consumers whose unauthorized transfers were not adequately investigated, consumers who were denied rightful refunds, and consumers who experienced prolonged account lockdowns or lacked provisional credits during delayed investigations. Block must ensure a minimum payment of \$75 million in refunds and other remedies. The CFPB assured that it will enforce the order's redress requirements to ensure affected Cash App users receive the due compensation. Consumers are not required to take any immediate action to obtain redress. Furthermore, Block is obligated to establish a 24-hour live-person customer service to prevent a recurrence of the misconduct, according to the CFPB. Block was also ordered to pay a \$55 million fine to the CFPB's victims relief fund
Finance CASH APP BLOCK CFPB FRAUD SECURITY FINES REFUNDS CONSUMER PROTECTION
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