MONTGOMERY, Ala. — Alabama will receive a portion of a $45 million multistate settlement with Block, Inc. after a lawsuit was filed against the company for deceptive practices, said an announcement from Attorney General Steve Marshall on Thursday.
Block Inc. is the company that runs the peer-to-peer payments app Cash App. The lawsuit alleged that customers were misled about safety, failed to protect users from fraud and did not provide fraud protection as required by law, stated Marshall’s announcement.
“We have long advised consumers to use caution when using peer-to-peer programs for payments. This settlement sends a clear message that companies offering these services must be transparent, secure, and accountable,” said Marshall. “Our office will continue to hold bad actors responsible and fight to ensure that consumers are protected in the digital marketplace.”
Of the $45 million Alabama will receive $595,421.
In the lawsuit it was claimed that fraud was becoming more common but emphasis was put more on marketing than protecting users. Other issues included these from the announcement:
- Block’s sign-up process was designed to be fast and frictionless, with minimal identity verification. That made it easy for fraudsters to create accounts, not just legitimate users.
- For years, Cash App had no phone support. Users who needed help could only message through the app or on social media. People who got locked out – or just wanted to talk to someone – searched online for a phone number and often ended up calling fake 1-800 numbers run by scammers posing as Cash App. Those scammers would then take over accounts or drain users’ other financial accounts. Block knew this was happening and didn’t warn users or set up a real phone line until years later.
- Block ran a social media promotion called Cash App Fridays, encouraging users to publicly post their $cashtag – a unique Cash App identifier – for a chance to win a weekly prize. Fraudsters would then contact those users, tell them they’d won, and trick them into handing over their login information. Block knew about these scams and kept running the promotion anyway, for years.
In the settlement Block agreed to the following terms:
- Maintain customer support that can resolve fraud complaints, account lockouts, and other problems.
- Offer live support 24 hours a day, with a human available by phone at least 13.5 hours a day and by live chat at least 18 hours a day.
- Stop making false or misleading claims about Cash App’s safety and how it protects users from fraud.
- Discontinue marketing practices known to increase fraud on the platform.
- Directly educate consumers about common types of fraud.
- Fulfill its legal obligations to investigate fraud claims and reimburse users for unauthorized transactions.
46 states took part in the lawsuit.
