Block Inc. has reached a settlement with several state attorneys general regarding its popular Cash App.
About Block Inc.’s Settlement:
This week, it was announced that Block Inc. — which owns Square, Cash App, and more — had agreed to a multistate settlement. In total, the company will pay $45 million. As part of the settlement, Block also reportedly reaffirmed plans to distribute compensation to consumers as part of a previous agreement with the Consumer Financial Protection Bureau (CFPB). That compensation is expected to be between $75 million and $120 million.
Among the complaints and accusations leveled against Cash App were that the app’s easy sign-up process also made it simple for fraudsters to create accounts. Reports also pointed out that, during promotions such as Cash App Fridays, the platform encouraged customers to share their Cashtags (usernames) publicly in order to win prizes. However, this practice allegedly served as prime bait for scammers who would target Cash App users and lead them to compromise their accounts. Moreover, Cash App previously didn’t offer live telephone support, leaving consumers with fewer options to get help when needed and, again, opening a door for fraud.
According to the terms of the settlement, Cash App has agreed to maintain customer support that can help resolve fraud complaints, including having live phone support available at least 13.5 hours per day (along with online chat). They’ve also agreed to end “marketing practices known to increase fraud risks” such as Cash App Fridays. Block will also provide educational materials to consumers, highlighting common scams and fraud techniques.
What They’re Saying:
New Hampshire’s Attorney General John M. Formella (whose state will receive $338,788.27 from the settlement) said, “Consumers deserve to know that when a financial services company promises to keep their money safe, it will stand behind those promises. This settlement holds Block accountable for failing to protect Cash App users from fraud and requires the company to strengthen its fraud prevention, customer support, and consumer reimbursement practices.”
Formella added, “As more people rely on digital payment platforms to manage their finances, companies must ensure they have the safeguards and customer protections necessary to protect consumers.”
My Thoughts:
Even as a Cash App fan, I can admit that a lot of these accusations do ring true. Unfortunately, there’s a fine line between creating a frictionless experience for consumers and building a tool that can be easily misused. That’s seemingly what happened here.
Of course, many of the issues exposed here are not unique to Cash App. Therefore, while this settlement may be helpful to customers who need help in resolving issues, all consumers inside and out of the Cash App ecosystem should remain vigilant when it comes to their money.
