Block to pay $45 million to settle Cash App fraud claims

Block Inc. agreed to pay $45 million under a consent judgment to resolve claims by a coalition of state attorneys general that Cash App misled users about security and failed to protect customers from fraud. The investigation covered nearly every U.S. state.

State prosecutors found the company promoted Cash App as offering protections similar to a traditional bank, which led some users to assume their funds were safeguarded in the same way. Regulators alleged Block lacked a consistent fraud-detection system and did not provide a functioning customer hotline for reporting scams.

Prosecutors alleged Block knew fraud was rising but did not warn customers and continued marketing. Regulators said the company targeted unbanked and underbanked people who in some cases used Cash App as their primary financial account.

Officials pointed to a social media promotion called “Cash App Friday,” in which users posted a unique app identifier for a chance to win prizes. According to prosecutors, fraudsters then contacted those users, claimed they had won and tricked them into handing over login information. Investigators concluded Block was aware of these scams but continued the promotion and trained staff to expect contacts from defrauded customers.

The consent judgment requires Block to maintain customer support services that can resolve fraud complaints, offer live 24-hour support and stop making claims about Cash App’s safety. The settlement does not include an admission of wrongdoing.

New York Attorney General Letitia James, who led the probe, stated: “New Yorkers were promised that Cash App was a safe and secure platform to send money, but in reality, the app exposed them to rampant fraud. For years, Cash App users lost money to costly scams because Block cared more about profits than protecting its users.”

In an emailed statement, a Block spokesperson described the agreement as resolving “a previously disclosed legacy matter that primarily relates to historical aspects of our business” and said Cash App has invested in consumer protection, customer service and compliance.

Shares of Block fell about 1.5% on the trading day after the settlement was announced.