Cash App owner to pay $45 million to settle allegations of lax security

The owner of Cash App will pay dozens of states a total of $45 million to settle allegations that it misled its users about the payment app’s security and exposed them to fraud.

State attorneys general announced the bipartisan agreement with Block, Inc. on Wednesday, saying that the company incorrectly promised users that Cash App offered the same protections as a bank. 

The company “failed to help users when they were scammed, misled consumers about the safety of Cash App, and failed to provide the fraud protection and resolution that it promised and was required to provide by law,” said New York Attorney General Letitia James. The state was one of 46 to participate in the agreement.

“Lax verification standards, a years-long absence of phone support, and deceptive social media promotions left users exposed to scammers,” said Texas Attorney General Ken Paxton. “Nevertheless, Cash App delayed internal fraud investigations and set unwarranted account lockouts which left victims with no way to recover stolen funds.”

Texas will receive $5 million under the agreement, and New York will get $1.6 million. States with smaller populations are receiving less than $1 million. 

Investigators found that because Cash App had no phone number for customer support, users searched online for one and ended up calling fake numbers set up by scammers.

“Block knew this was happening and failed to warn users or set up a real phone line until 2021,” James said.

The app did not require a Social Security number or date of birth for signup, investigators found, “and there was no limit on how many accounts one person could open, allowing one bad actor to operate an entire network of scam accounts.”

The consent judgment in New York, like those in other states, also requires Block to maintain live support 24 hours a day, with at least 13.5 hours covered by “a real person.”

The agreement also reaffirms a federal agreement for Block to distribute between $75 million and $120 million to states under a related January 2025 consent order from the Consumer Financial Protection Bureau. 

As of Wednesday afternoon, neither Block nor Cash App had issued a statement about the settlement. Founded by Twitter founder Jack Dorsey in 2009, Block’s portfolio also includes the payment technology Square and the music service Tidal.