Block, the parent company of the platform Cash App, has been ordered by the government to pay up to $175 million dollars for failing to protect its users from fraud.
Under a consent order filed earlier this week, Block has agreed to pay up to $120 million in restitution to clients who were victims of fraudulent transactions and unfair business practices. The company will also pay a $55 million dollar fine to the Consumer Financial Protection Bureau’s (CFPB) victim relief fund, according to a recent press release.
“CashApp created the conditions for criminals to exploit and defraud users, and then illegally left its users stranded when they most needed help,” CFPB Director Rohit Chopra wrote in a post to social media.
The CFPB’s investigation found that Cash App, despite its growing user base of over 56 million, did not fairly protect consumers from a large amount of unauthorized transactions. Cash App’s terms of service allegedly misled users into thinking that their bank was responsible for handling disputes over fraud, when in fact Cash App was legally required to investigate such issues under the Electronic Fund Transfer Act.
The CFPB’s order claims that when investigations were conducted they were often “intentionally shoddy,” with many reports being closed in Cash App’s favor, even after consistent customer complaints about unauthorized transactions.
The agency also criticized Cash App’s customer service, which it described as difficult to access and ineffective. Users trying to reach support often experienced long delays, inaccurate responses or were redirected to “self-service” tools within the app, leaving many issues or fraud transactions unresolved, reported CBS.
In addition to the $175 million payout, the consent order mandates that Block provide 24-hour live customer service and investigate all unauthorized transactions promptly. The company must also ensure timely refunds for cases that fit the criteria for a resolution, according to the CFPB.
Block, which generated $7.5 billion in gross profit within 2023 alone, with $4 billion coming from Cash App, has disputed the CFPB’s investigation and recent findings.
In a statement responding to the standards of privacy for its users, the company said, “While we strongly disagree with the CFPB’s mischaracterizations, we made the decision to settle this matter in the interest of putting it behind us and focusing on what’s best for our customers and our business.”