Mass. to receive $730,000 from Cash App in alleged deception settlement

Cash App is disbursing funds to several states — including $730,000 to Massachusetts — in a settlement over alleged deceptive practices.

The $45 million multistate settlement resolves allegations that Block Inc., the company behind Cash App, misled consumers about the safety of the app and failed to protect users from fraud, Attorney General Andrea Campbell said in a statement. press release. Massachusetts is one of 46 states participating in the settlement.

Campbell’s office said the ban made it clear to users that Cash App works like a bank and comes with the same protections. Although she knew that fraud was “rising sharply” on the platform, she neglected to warn users or enhance security measures.

For years, the company has promoted direct deposits of payroll checks and government benefits into Cash App, especially to consumers who don’t have a traditional bank account to rely on. These consumers used the app as their primary financial account and were more vulnerable to fraud as a result, the Attorney General’s Office said.

As the Cash App user base grew, Block failed to ensure its ability to support a dramatically increasing number of consumers. Furthermore, the company allowed numerous practices that made fraud easier, according to prosecutors.

The main security issues were that the Block registration process required minimal identity verification and that Cash App did not have phone support. Instead, users who were locked out of their accounts or needed help should reach out through the app or via social media, Campbell’s office said.

Users who searched online for a phone number often ended up calling fake 1-800 numbers operated by scammers who posed as a cash app, took over accounts, and sometimes drained their other financial accounts. Block knew of the vulnerability in its security, but did not warn users or set up phone support until years later, according to Campbell’s office.

In addition, the company ran a weekly social media promotion called Cash App Fridays, where users were encouraged to post a unique identifier known as a “$cashtag” for a chance to win a prize. The scammers then contacted these users, told them they had won, and tricked them into giving the scammers access to their accounts. As with the phone issue, Block knew about these scams but did nothing and continued to run the promotion, the district attorney’s office said.

With no way to protect against fraud and inadequate customer service, many Cash App users who experienced automatic account locks found themselves unable to access their funds for weeks at a time. Prosecutors said fraud victims rarely get their money back because of delays and Block’s failure to investigate unauthorized transactions or issue refunds.

“Businesses that advertise the safety and security of their platforms are obligated to deliver on those promises. Instead, Cash App enabled fraud by failing to take the necessary security measures and running promotions that put users at risk,” AG Campbell said. “This settlement ensures that Cash App enhances protections for users, implements responsible practices, and provides genuine, responsive customer service.”

The settlement requires Block to establish and maintain responsible practices to protect against fraud, according to Campbell’s office. This includes stopping false claims about the safety of Cash App, stopping promotions known to increase fraud, educating consumers about common fraud methods, and compensating users for unauthorized transactions.

Block will also be required to improve communication by maintaining customer support that can resolve account closures and fraud-related issues. That includes 24-hour live support with someone available by phone for at least 13 1/2 hours per day and through live chat for at least 18 hours per day, prosecutors said.

Under a separate settlement, Block committed to paying between $75 million to $120 million to compensate consumers across the country. This latest settlement reaffirms that commitment, according to Campbell’s office.