CFPB fines Block the operator of Cash app as the company failed to protect users from fraud. It also violated consumer financial laws.
The Consumer Financial Protection Bureau (CFPB) has imposed a $175 million fine on Block’s Cash App.
The enforcement action requires Block to refund up to $120 million to affected consumers. Block must also pay a $55 million fine to the CFPB’s victims relief fund.
CFPB Holds Cash App Accountable for Security Lapses
According to the CFPB, Block employed weak security protocols that allowed fraudulent activities to flourish on Cash App. Despite legal requirements, the company failed to properly investigate and resolve disputes related to unauthorized transactions. Instead, it directed users to request reversals from their banks, which Block would subsequently deny.
CFPB Director Rohit Chopra criticized Cash App for creating conditions that enabled fraud. He also accused them of shifting their investigative responsibilities onto local banks.
Cash App’s Deceptive Practices and Inadequate Customer Support
The CFPB found that Cash App misled users through deceptive Terms of Service. These terms made users believe that dispute investigations were the responsibility of their linked banks.
However, under the Electronic Fund Transfer Act, Cash App is legally required to investigate unauthorized transactions. It attempted to evade this responsibility.
Additionally, Cash App provided inadequate customer support. While the app listed a customer service phone number, it did not connect users to real assistance. Instead, consumers were redirected to the app’s support page or required to send inquiries via mail. This lack of live customer support left users vulnerable to fraudsters impersonating Cash App representatives.
Enforcement Actions Against Block
The CFPB’s order outlines several corrective actions that Block must implement:
- Refunding Consumers: Block must pay up to $120 million in refunds. This compensates users who experienced unauthorized transactions. It also addresses inadequate dispute resolutions.
- Improving Customer Support: The company must establish 24-hour, live-person customer service to assist users with fraud-related issues.
- Investigating Unauthorized Transactions: Block must properly investigate all disputed transactions and issue refunds where necessary.
- Paying a $55 Million Fine: The penalty will be directed to the CFPB’s victims relief fund.
Additional State-Level Penalties for Block
State regulators have imposed an $80 million fine on Block. This is for violations related to the Bank Secrecy Act and anti-money laundering laws. Beyond the CFPB’s enforcement, this highlights broader concerns over Block’s compliance with financial regulations.
To Sum Up
CFPB fines Block, Cash App’s operator, highlighting the need for robust security measures. They also emphasize the importance of transparent customer support in financial services.
This enforcement serves as a warning to digital payment platforms to prioritize consumer protection and legal compliance. Users of Cash App are advised to stay vigilant and report any suspicious activities to ensure their financial security.