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CFPB orders Cash App owner to pay $175M for fraud failures

The CFPB on Thursday announced it has ordered Block, Inc., the operator of the peer-to-peer payments app Cash App, to refund and pay other redress to consumers up to $120 million and pay a penalty of $55 million into the CFPB’s victims relief fund. The Bureau found that Block employed weak security protocols for Cash App and put its users at risk. While Block is required by law to investigate and resolve disputes about unauthorized transactions, the company’s investigations were woefully incomplete. Block directed users — who had suffered financial losses as a result of fraud — to ask their bank to attempt to reverse transactions, which Block would subsequently deny. Block also deployed a range of tactics to suppress Cash App users from seeking help, reducing its own costs.

Specifically, the CFPB found that 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).
  • 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.
  • 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.
  • Engaged in deception by misrepresenting that it protected consumers from unauthorized transfers and had a telephone line to report such unauthorized transfers.
  • Failed to comply in multiple ways with the requirements of EFTA and Regulation E, including regarding error resolution.
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