CFPB fines Block $175m over Cash App's lax fraud controls

The Consumer Financial Protection Bureau (CFPB) announced today that's it's fining Block, the creator of Cash App and parent company of Square, $120 million in "refunds and redress" and a $55 million fine for how the company handled fraud on its payment platform.

Per the CFPB, Cash App's Terms of Service at one point claimed that any bank linked to an account for transferring funds was responsible for addressing disputes around fraudulent charges, something that's not generally true under the Electronic Fund Transfer Act. Block would use that claim to avoid assuming responsibility, and when it would investigate a complaint, it relied on "intentionally shoddy investigation practices to close reports of unauthorized transactions in the company’s favor," CFPB's statement explains.

Accessing any kind of customer service for Cash App was a challenge, too, according to the CFPB. Block included a customer service number on Cash App cards and in the app's Terms of Service, but calling it would it ultimately lead users to "a pre-recorded message directing consumers to contact customer support through the app." And reaching out to the company through the app or physical mail often led to delayed or confusing responses.

Besides the $175 million total Block owes, the CFPB is also directing the company to set up a live 24/7 customer support line. Block has agreed to comply with the order. "While we strongly disagree with the CFPB’s mischaracterizations," the company shared on its blog, "we made the decision to settle this matter in the interest of putting it behind us and focusing on what’s best for our customers and our business."

The Consumer Financial Protection Bureau has taken an increasingly aggressive approach towards regulating payment apps and digital wallets in the last year of the Biden Administration. The CFPB expanded its purview from just banks to wallets and payments apps in November 2024, and came after the payment app Zelle not even a month later.

These attempts at regulation are facing pushback, too. NetChoice, a trade association for online companies, and TechNet, "a bipartisan network of technology CEOs," are both suing the CFPB over its efforts to clean up digital payments, with familiar claims of government overreach and that the CFPB failed to explain the risks it was addressing when it decided to regulate payment apps in the first place.

This article originally appeared on Engadget at https://www.engadget.com/cybersecurity/cfpb-fines-block-175m-over-cash-apps-lax-fraud-controls-210749768.html?src=rss https://www.engadget.com/cybersecurity/cfpb-fines-block-175m-over-cash-apps-lax-fraud-controls-210749768.html?src=rss