SAN FRANCISCO— Block Inc., the parent company of Cash App, has agreed to pay $45 million to settle a multistate investigation alleging it misled consumers about the app's fraud protections and failed to adequately safeguard users from scams, with 46 states requiring the fintech company to strengthen customer support and security practices, Reuters reported.
State attorneys general alleged Block marketed Cash App as offering protections comparable to those provided by traditional banks while allowing users to open multiple accounts with limited identity verification and failing for years to provide live customer phone support. Investigators said those weaknesses made it easier for fraudsters to exploit consumers, including through fake customer service scams and unauthorized transactions. Block denied wrongdoing but agreed to the settlement, Reuters said.
Under the agreement, Block must overhaul its fraud prevention and dispute-resolution processes, including providing live customer support, enhancing identity verification, improving fraud investigations and complying with consumer protection requirements governing unauthorized electronic fund transfers. Individual states will receive shares of the settlement, with funds earmarked for consumer protection and enforcement efforts, Reuters said.
The settlement is the latest regulatory action involving Cash App. Earlier this year, Block began distributing between $75 million and $120 million to eligible consumers under a separate settlement with the Consumer Financial Protection Bureau over the company's handling of fraud complaints and unauthorized transactions. Washington state also announced a separate $20 million settlement with Block tied to fraudulent pandemic unemployment payments processed through Cash App accounts.