Block, the financial technology company behind the popular peer-to-peer payment platform Cash App, has agreed to pay $45 million and significantly strengthen its fraud prevention and customer support systems to settle allegations from 46 U.S. states that it failed to adequately protect users from scams and financial fraud.
The settlement marks another major regulatory challenge for the company as U.S. authorities continue increasing scrutiny of digital payment platforms over consumer protection, identity verification and financial crime controls.
The multistate investigation concluded that Block’s fraud prevention measures failed to keep pace with the rapid growth of Cash App, exposing users to scams while creating opportunities for fraudsters to exploit weaknesses in the platform.
Although the company agreed to the settlement, it denied any wrongdoing.
In a statement, Block described the agreement as the resolution of a “previously disclosed legacy matter” that largely relates to historical aspects of its business. The company said Cash App has since made substantial investments in consumer protection, customer service, and regulatory compliance.
“We share the commitment of the attorneys general to addressing industry challenges and continue to invest in operations and technology to promote a safe and healthy financial ecosystem,” Block said.
The investigation, led by attorneys general from 46 states, alleged that Cash App’s marketing created a misleading impression that users enjoyed protections similar to those offered by traditional banks.
According to state officials, advertising suggested that Cash App employed sophisticated fraud detection systems and offered security safeguards comparable to those available through regulated financial institutions. Investigators argued that those representations did not accurately reflect the platform’s actual fraud prevention capabilities.
The states also alleged that as fraudulent activity increased in recent years, Block focused more heavily on expanding Cash App’s user base than on strengthening security measures designed to protect customers.
One of the central criticisms involved the platform’s account creation process.
According to investigators, users were able to establish Cash App accounts without providing a Social Security number or date of birth. Authorities also said individuals could create multiple accounts without meaningful restrictions, making it easier for fraudsters to open new accounts after previous ones had been detected or closed.
State officials said that these weaknesses enabled a wide range of financial scams, including identity theft, impersonation schemes, and fraudulent payment requests.
The investigation also highlighted what regulators described as a major customer service failure. For years, Cash App did not provide customers with an official telephone support line. As a result, users who became locked out of their accounts or needed urgent assistance frequently searched online for customer service numbers.
According to the states, scammers exploited that gap by creating fake customer support websites and telephone numbers that appeared legitimate. Unsuspecting customers who contacted those fraudulent numbers were often tricked into revealing account credentials or authorizing fraudulent transactions.
Investigators said that the absence of accessible live customer support indirectly contributed to additional consumer losses.
Under the agreement, Block will implement broad changes to Cash App’s customer service operations and fraud prevention systems. Among the most significant requirements is the introduction of around-the-clock customer support. The company must provide 24-hour customer service, including access to live telephone agents for at least 13.5 hours each day.
The settlement also requires Block to strengthen fraud detection capabilities and improve consumer protection procedures, although officials did not publicly detail every operational change included in the agreement.
Regulators said the measures are intended to reduce fraud risks while giving customers faster access to legitimate assistance when problems arise.
Separate Washington Settlement Over COVID-19 Unemployment Fraud
The multistate agreement comes alongside another settlement announced Wednesday involving the State of Washington. Washington Attorney General Nick Brown said Block separately agreed to pay $20 million to resolve allegations that Cash App facilitated fraudulent unemployment insurance payments during the COVID-19 pandemic.
According to Brown’s office, Cash App processed at least $22 million in unemployment benefits that had been fraudulently obtained over a five-month period in 2020.
Authorities alleged that criminals used stolen personal information belonging to Washington residents to receive unemployment payments through Cash App accounts. The lawsuit claimed Block failed to maintain sufficient anti-fraud controls to detect or prevent the fraudulent transactions.
Block denied those allegations in court filings but agreed to the financial settlement without admitting liability.
The latest settlements add to a growing list of regulatory actions involving Cash App. Last year, Block agreed to pay up to $120 million, including $40 million to New York, to settle allegations brought by another coalition of states that Cash App failed to implement adequate anti-money laundering controls.
As in the current case, the company denied wrongdoing while agreeing to resolve the claims.
Cash App has become one of the largest digital payment platforms in the United States, allowing users to send money, receive direct deposits, invest in stocks and cryptocurrencies, and access other financial services. Its rapid expansion has made it an increasingly important player in consumer finance while also drawing closer attention from regulators concerned about cybersecurity, financial crime and consumer protection.
The latest settlement suggests regulators expect fintech companies to provide safeguards comparable to those required of more traditional financial institutions, particularly as consumers increasingly rely on digital payment platforms for everyday banking activities.
