Up to $120 million in consumer redress plus a $55 million civil money penalty (CMP) must be paid by Block, the owner of peer-to-peer payments app Cash App, under a consent order announced Thursday by the federal consumer financial protection agency.
The Consumer Financial Protection Bureau (CFPB) said Block, Inc. is a publicly traded corporation whose principal executive offices are in Oakland, Calif. It offers multiple digital payments products for businesses and consumers, including the point-of-sale payment system Square and the consumer payment service Cash App. The bureau said CashApp, one of the largest peer-to-peer payment platforms in the U.S., accounted for roughly $4 billion of Block’s 2023 gross profit of about $7.5 billion.
The CFPB, in Thursday’s order, said Block used weak security protocols for Cash App and put its users at risk. Among the specifics cited:
- For years after the inception of Cash App, Block failed to provide effective customer service for Cash App, including by failing to provide live telephone agents, which prevented consumers from being able to have their financial issues addressed in a proper and timely fashion and resulted in fake customer service lines through which consumers’ information would be stolen, in a manner that was unfair in violation of the Consumer Financial Protection Act of 2010 (CFPA).
- Block failed to take timely, appropriate, and effective measures to prevent, detect, limit, and address fraud on the Cash App platform in a manner that was unfair in violation of the CFPA.
- Block used the card network chargeback process as a substitute for fulfilling its obligations under the Electronic Fund Transfer Act (EFTA) and Regulation E to investigate and resolve disputes about unauthorized transactions in a timely manner, in violation of the CFPA’s prohibition on unfair practices.
- Block engaged in deception by misrepresenting that it protected consumers from unauthorized transfers and had a telephone line to report such unauthorized transfers.
In its order, the bureau ordered that Block:
- Pay at least $75 million and up to $120 million in refunds and other redress to consumers whose unauthorized transfers were not investigated, consumers who did not receive refunds they were entitled to, and consumers whose accounts were locked for an extended period of time or who were not provided provisional credits during a delayed investigation. The CFPB said it will enforce the order’s redress requirements to ensure affected Cash App users receive redress,” it said.
- Set up 24-hour, live-person customer service, fully investigate unauthorized transactions, and to provide timely refunds, where appropriate.
- Pay a $55 million CMP to the CFPB victims relief fund.
CFPB Orders Operator of Cash App to Pay $175 Million and Fix Its Failures on Fraud
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