Block said in a statement that the settlement “resolves a previously disclosed legacy matter that primarily relates to historical aspects of our business.” The company noted that Cash App has since made significant investments in consumer protection, service, and compliance.
Block has agreed to pay $45 million and begin offering live support for its mobile payment service, Cash App, to settle claims that the company failed to protect consumers across the United States from fraud.
According to Reuters, the lawsuit was filed and joined by attorneys general from 46 states.
The attorneys general said that a multistate investigation found that Block regularly misled customers with advertising that falsely indicated that Cash App’s virtual security system was similar in strength to that employed by large brick-and-mortar banks.
Block, for its part, denied any and all wrongdoing.
Reuters notes that the lawsuit was motivated, in part, by a significant increase in reports of fraud centering on or involving Cash App. The attorneys general say that Block responded to higher rates of fraud not by introducing new protections but by expanding the scope of its marketing campaigns.
The lawsuit also suggested that Cash App posed an inherent risk by allowing customers to create accounts without providing a Social Security number, a date of birth, or any other information that could be used to verify their identity. Users could also create as many accounts as they wanted, making it easier for cybercriminals to conceal both their identities and the extent of their fraud.
Furthermore, because Cash App offered no over-the-phone support, some consumers allegedly ended up calling fake customer service numbers run by scam companies.
Under the terms of the settlement, Block will update its customer service offerings and improve its fraud prevention services. Among other things, Cash App will soon offer 24-hour support, with phone agents available for at least 13.5 hours each day.
“Cash App failed to protect its users from fraud and then made it nearly impossible for victims to recover what they lost,” Maryland Attorney General Anthony G. Brown said in a press release announcing the agreement. “This settlement strengthens the company’s fraud and dispute resolution practices: protections that Maryland consumers deserve when they trust a business with their money.”
Block said in a statement that the settlement “resolves a previously disclosed legacy matter that primarily relates to historical aspects of our business.” The company noted that Cash App has since made significant investments in consumer protection, 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.
In a press release, Washington state Attorney General Nick Brown said that Block had separately agreed to pay $20 million to settle a lawsuit claiming that the company facilitated a large number of fraudulent unemployment insurance payments during the coronavirus pandemic. Over the course of several months in 2020, Brown said, Cash App processed at least $22 million in benefits that had been approved using the stolen personal information of Washington residents.
Reuters notes that every U.S. state participated in the claim against Block with the exceptions of Hawaii, Missouri, South Carolina, and Wyoming.
Sources
Cash App parent settles states’ probe over fraud protections for $45 million
Join the conversation!