CFPB fines $175 million over Cash App’s lax fraud controls

The Consumer Financial Protection Bureau (CFPB) made the announcement today She fines Blockcreator of Cash App and the parent company of Square, received $120 million in “refunds and damages” and a $55 million fine for how the company handled fraud on its payment platform.

According to the CFPB, Cash App’s terms of service at one point claimed that any bank associated with a money transfer account was responsible for handling disputes over fraudulent charges, which is generally untrue under CFPB law. Electronic Funds Transfer Law. The CFPB statement explains that Block will use this allegation to avoid liability and, when it investigates a complaint, rely on “intentionally poor investigative practices to close reports of unauthorized transactions for the benefit of the company.”

Accessing any type of customer service for Cash App was also a challenge, according to the CFPB. The ban included a customer service number on Cash App cards and in the app’s terms of service, but calling it would eventually lead users to a “pre-recorded message directing consumers to contact customer support through the app.” Communicating with the company through the app or physical mail often resulted in delayed or confusing responses.

Along with the block’s total outstanding debt of $175 million, the CFPB is also directing the company to establish a 24/7 live customer support line. The bloc agreed to comply with the order. “While we strongly disagree with the CFPB’s mischaracterizations,” the company said Subscriber to his blog“We have made the decision to settle this matter in order to put the matter behind us and focus on what is best for our customers and our business.”

The Consumer Financial Protection Bureau has taken an increasingly aggressive approach to regulating payment apps and digital wallets in the final year of the Biden administration. CFPB Expanded its scope From banks only to wallets and payment apps in November 2024, and beyond Zelle payment app Not even after a month.

These attempts at organization also face resistance. NetChoice, a trade association for Internet companies, and TechNet, “a bipartisan network of technology executives,” Both are suing the CFPB Because of its efforts to clean up digital payments, with familiar allegations 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.