The CFPB alleges that Cash App's weak security and inadequate handling of unauthorized transactions left users vulnerable to fraud and failed to provide proper recourse.
Block , the parent company of the popular peer-to-peer payment platform Cash App , has been ordered by the Consumer Financial Protection Bureau ( CFPB ) to pay up to $120 million in restitution to fraud victims and a $55 million penalty. The CFPB alleged that Block employed weak security protocols for Cash App , leaving its users vulnerable to fraud.
The regulator criticized Cash App's inadequate investigation of unauthorized transactions, claiming the company routinely directed victims to seek charge reversals from their banks, which Block would then deny. The CFPB also accused Block of using various tactics to discourage users from seeking assistance, thereby reducing its own costs.Block, in response, stated its commitment to providing a safe and secure user experience on Cash App. The company acknowledged that its rapid growth during the pandemic, with millions of new users, placed unprecedented strain on its customer service infrastructure. Block claimed to have made significant investments in customer support and scam prevention measures. While stating that it disagreed with the CFPB's characterizations, Block opted to settle the matter to focus on its customers and business operations.Cash App, one of the largest peer-to-peer payment platforms in the U.S. with over 56 million accounts, allows users to send and receive electronic money transfers, accept direct deposits, and use a prepaid card for purchases and ATM withdrawals. As part of the settlement agreement with the CFPB, Block is obligated to pay up to $120 million in refunds and other redress to consumers who experienced unauthorized transfers that were not investigated, consumers who were denied rightful refunds, and users whose accounts were excessively locked or who lacked provisional credits during delayed investigations. The minimum refund amount set by the CFPB is $75 million. The CFPB will actively enforce the redress requirements to ensure affected Cash App users receive the compensation they are due. Consumers are not required to take any immediate action to claim redress. Furthermore, Block is mandated to establish a 24/7 live-person customer service line to prevent the recurrence of the alleged misconduct. Block will also pay a $55 million fine to the CFPB's victims relief fund
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