Cash App's $175 Million Settlement: What You Need to Know About Customer Refunds and Service Failures

Cash App's Major Settlement

Cash App, operated by Block Inc., is set to pay out up to $120 million in refunds to customers affected by its poor customer service and a rise in fraud incidents. Additionally, the company will incur $55 million in penalties due to regulatory actions from the Consumer Financial Protection Bureau (CFPB) and various state agencies.

Background of the Settlement

The CFPB highlighted that Block employed weak security protocols that jeopardized users' safety. Customers will automatically receive refunds from a pool of $75 million to $120 million, with no action needed on their part. Within the next 120 days, Block must submit a detailed plan to the CFPB outlining how it will handle these refunds.

Customer Service Failures

For years, Cash App's customer service was severely lacking. The CFPB noted that from 2016 to February 2021, the company did not offer live customer support, which contributed to the proliferation of fraud on its platform. Many customers were directed to a recorded message when seeking help, and complaints often went unresolved.

Regulatory Actions and Consequences

Recently, Michigan and 47 other states launched enforcement actions against Block for violations of the Bank Secrecy Act and anti-money laundering laws. An $80 million penalty was part of the settlement, with Michigan receiving approximately $1.6 million for enforcement.

Issues with Fraud and Customer Complaints

The CFPB's order also pointed out that Block failed to investigate unauthorized transfers adequately, leading to customers not receiving due refunds. Many users faced account lockouts and insufficient support during fraud investigations. The CFPB emphasized that Block's practices often led to further fraud as frustrated customers sought help from online scammers posing as Cash App representatives.

Moving Forward

In response to these issues, the CFPB has mandated that Block must establish a 24-hour live customer service and conduct thorough investigations into unauthorized transactions. Block has stated its commitment to improving customer service and addressing the issues raised by regulators.

For further information, you can read the full statement from Block about their dedication to customer service and protection.