The Consumer Financial Protection Bureau ordered Cash App (SQ+1.24%) operator Block to pay a total of $175 million for failing to address fraud on the mobile payment network.
“Cash App created the conditions for fraud to proliferate on its popular payment platform,” said CFPB Director Rohit Chopra in a statement Thursday. “When things went wrong, Cash App flouted its responsibilities and even burdened local banks with problems that the company caused.”
The sum includes $120 million to compensate consumers and a fine of $55 million that will go to the CFPB’s victims relief fund.
Block, which is run by Twitter co-founder and former CEO Jack Dorsey, provided “woefully incomplete” investigations and customer service to resolve disputes, and employed weak security protocols that put Cash App users at risk of fraud, according to a consent order filed by the agency.
“While Block is required by law to investigate and resolve disputes about unauthorized transactions, the company’s investigations were woefully incomplete,” the CFPB said. “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.”
The company also “deployed a range of tactics to suppress Cash App users from seeking help, reducing its own costs,” the agency said.
Mobile payment platforms have risen in popularity in recent years, as more transactions take place online. More than three-quarters of U.S. adults have used a mobile payment app, such as Cash App, Venmo (PYPL+0.10%), or PayPal, according to a 2023 study by the CFPB.
For its part, Cash App, which launched in 2013, said that it has made significant investments in customer support and resolving concerns more efficiently in recent years, following an influx of new users during the pandemic.
“While we strongly disagree with the CFPB’s mischaracterizations, 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,” Cash App said in a blog post responding to the order.
The order is part of a sweeping effort by the CFPB to crack down on widespread fraud across payments networks. Last month, the CFPB sued JPMorgan Chase (JPM+1.43%), Wells Fargo (WFC-0.49%), and Bank of America (BAC+0.02%) over failures to stop fraud perpetrated through Zelle, the payments network owned by Early Warning Services, a company co-founded by the banks.
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