The parent company of Cash App, a widely used payment platform, has agreed to a substantial settlement with federal regulators over allegations of inadequate fraud prevention and poor customer service. Block, the firm behind Cash App and Square, must return up to $120 million to affected users and pay a $55 million fine. The Consumer Financial Protection Bureau (CFPB) accused Cash App of failing to properly address customer complaints about unauthorized transactions and scams. Additionally, the company was criticized for providing an ineffective customer service hotline that redirected users back to the app, exacerbating issues and potentially enabling scammers.
On Thursday, the CFPB revealed that Cash App did not meet its legal obligations to investigate user complaints regarding account hijackings and fraudulent activities. The agency highlighted significant shortcomings in the company’s response to unauthorized charges, including delays in processing refund requests. A key issue was the lack of a genuine helpline for users seeking immediate assistance. Instead of offering live support, Cash App provided a phone number that only directed callers back to the app, which the CFPB claims contributed to widespread problems.
According to the CFPB, this flawed system led to numerous instances where customers, trying to resolve issues, inadvertently contacted fake customer service representatives set up by scammers. These impostors tricked individuals into sharing sensitive information, allowing them to take control of their accounts. The CFPB also noted that Cash App failed to warn users about these fraudulent numbers until 2020, despite being aware of the problem earlier. This delay further jeopardized consumer security and trust in the platform.
The announcement comes on the heels of another settlement between Block and state financial regulators, totaling $80 million, related to money laundering concerns on Cash App. Despite these challenges, Block maintains that the issues have been resolved and disputes some of the allegations. In a statement, the company emphasized its commitment to moving forward in the best interest of its customers and business.
Moving forward, the CFPB's order mandates that Cash App establish a 24-hour live customer service line to better address user concerns promptly. This requirement underscores the importance of robust customer support in maintaining trust and preventing further exploitation by fraudsters. The case serves as a stark reminder of the critical role effective communication channels play in safeguarding consumers in the digital finance space.