Cash App Owner Block to Pay $45 Million Over Lax Security Allegations
Block, Inc., the parent company of Cash App, has agreed to a $45 million settlement with state attorneys general over allegations of inadequate security measures and misleading users about the app's protections.
Block, Inc., the financial technology company behind Cash App, has reached a $45 million settlement with 46 state attorneys general to resolve allegations that it failed to implement adequate security measures and misled consumers about the app's safety. The bipartisan agreement, announced Wednesday, addresses claims that Block misrepresented Cash App's security, promising users protections equivalent to those offered by a bank, which investigators found to be untrue.
New York Attorney General Letitia James stated that the company "failed to help users when they were scammed, misled consumers about the safety of Cash App, and failed to provide the fraud protection and resolution that it promised and was required to provide by law." Similarly, Texas Attorney General Ken Paxton highlighted "lax verification standards, a years-long absence of phone support, and deceptive social media promotions" that left users vulnerable to scammers. The settlement aims to rectify these issues and provide restitution to affected users.
Investigators found that Cash App's lack of a dedicated phone support line led many users to seek out numbers online, often calling fake numbers operated by scammers. Block was aware of this issue but reportedly delayed implementing a legitimate phone line until 2021. This absence of direct support, coupled with lax account creation requirements—such as not requiring a Social Security number or date of birth and allowing unlimited account creation per individual—facilitated the operation of extensive scam networks.
Under the terms of the settlement, Texas will receive $5 million, and New York will be allocated $1.6 million, with other participating states receiving amounts based on their population size, generally less than $1 million. This agreement is in addition to a related January 2025 consent order from the Consumer Financial Protection Bureau (CFPB), which requires Block to distribute between $75 million and $120 million to states.
The consent judgment also mandates that Block maintain 24-hour live customer support, with at least 13.5 hours of that coverage provided by a human agent. This measure is intended to improve user access to assistance and expedite the resolution of fraud-related issues, directly addressing a key criticism leveled against the company.
While Block and Cash App had not issued a public statement regarding the settlement as of Wednesday afternoon, the agreement signifies a significant regulatory action against the company for its security and customer protection practices. The settlement underscores the growing scrutiny financial technology companies face regarding their data security and fraud prevention protocols.
Founded in 2009 by Twitter founder Jack Dorsey, Block's business interests extend beyond Cash App to include the payment processing service Square and the music streaming platform Tidal. This settlement highlights the broader challenges in ensuring robust security across a diverse portfolio of consumer-facing financial services.