Mass. to receive $730,000 from Cash App in alleged deception settlement

Cash App is cashing out to several states — including $730,000 to Massachusetts — in a settlement over alleged deceptive practices.

The $45 million multistate settlement resolves allegations that Block Inc., the company behind Cash App, misled consumers about the app’s safety and failed to protect users from fraud, Attorney General Andrea Campbell said in a press release. Massachusetts is one of 46 states involved in the settlement.

Block implied to users that Cash App worked like a bank and came with the same protections, Campbell’s office said. Despite knowing that fraud was “rising sharply” on the platform, it neglected to warn users or strengthen security measures.

For years, the company promoted direct deposits of paychecks and government benefits into Cash App, particularly to consumers without a traditional bank account to rely on. These consumers used the app as their primary financial account and were more susceptible to fraud as a result, the AG’s office said.

As Cash App’s user base grew, Block failed to ensure it could support a vastly increased number of consumers. Beyond that, the company allowed several practices that made fraud easier to carry out, according to prosecutors.

The chief security issues were that Block’s sign-up process required minimal identity verification and that Cash App had no phone support. Instead, users who got locked out of their accounts or needed help had to reach out through the app or on social media, Campbell’s office said.

Users who searched online for a phone number often ended up calling fake 1-800 numbers run by scammers who posed as Cash App, took over the accounts, and sometimes drained their other financial accounts. Block knew of this hole in their security but didn’t warn users or set up phone support until years later, according to Campbell’s office.

Additionally, the company ran a weekly social media promotion called Cash App Fridays, where users were encouraged to post a unique identifier known as a “$cashtag” for a chance to win a prize. Fraudsters then contacted those users, told them they won, and tricked them into giving the scammers access to their accounts. As with the phone issue, Block knew of these scams but did nothing and continued to run the promotion, the AG’s office said.

With no way to protect from scams and inadequate customer service, many Cash App users who experienced automated account locks found themselves unable to access their money for weeks at a time. Fraud victims seldom got their money back due to delays and Block’s failure to investigate unauthorized transactions or issue refunds, prosecutors said.

“Companies that advertise the safety and security of their platforms have an obligation to deliver on those promises. Instead, Cash App enabled fraud by failing to take necessary security measures and running promotions that put users at risk,” said AG Campbell. “This settlement ensures Cash App will strengthen protections for users, implement responsible practices, and provide real, responsive customer service.”

The settlement requires Block to create and maintain responsible practices to protect against fraud, according to Campbell’s office. This includes ceasing false claims about Cash App’s safety, discontinuing promotions known to increase fraud, educating consumers about common fraud methods, and reimbursing users for unauthorized transactions.

Block will also be required to improve communication by maintaining customer support that can resolve account lockouts and fraud-related issues. This includes 24-hour live support with a human available by phone at least 13 ½ hours a day and by live chat at least 18 hours a day, prosecutors said.

Under a separate settlement, Block was committed to pay $75 million to $120 million to compensate consumers nationwide. This latest settlement reaffirms that commitment, according to Campbell’s office.