CashApp owner to pay $175M over cybersecurity, customer service issues

CashApp fine overview:

• Who: The United States Consumer Financial Protection Bureau has fined Block Inc., the parent company of CashApp.
• Why: The CFPB accused CashApp of failing to provide adequate customer service and fraud protection, leading to unauthorized transactions and consumer harm.
• Where: The CashApp fine was announced by the United States government.

CashApp parent company Block Inc. has been ordered to pay $175 million to resolve allegations that it failed to provide adequate customer service and fraud protection, leading to unauthorized transactions and consumer harm, the Consumer Financial Protection Bureau announced Jan. 16.

The CFPB alleged that CashApp, a popular peer-to-peer payment platform, did not offer live customer support until 2021, leaving users vulnerable to scams and fraud. The agency said that the lack of a CashApp customer service phone line allowed fraudsters to post fake numbers online, tricking consumers into contacting them and giving them access to their accounts.

According to the CFPB, CashApp’s failure to provide live support caused substantial injury to consumers, who were unable to access their funds or report unauthorized transactions promptly. The agency said some consumers lost significant amounts of money after calling fake CashApp customer service numbers and following instructions from fraudsters to download malware or provide personal information.

“CashApp failed to provide adequate customer service and fraud protection, leaving consumers vulnerable to scams and unauthorized transactions,” CFPB Director Rohit Chopra said in a statement on the CashApp fine. “This action sends a strong message that companies must prioritize consumer protection and ensure that their products are safe and reliable.”

CashApp failed to investigate unauthorized transactions, CFPB claims

The CFPB also alleged that CashApp failed to investigate unauthorized transactions or provide refunds to consumers who reported them. The agency said that the platform often directed users to contact their banks or merchants instead of conducting its own investigations, in violation of federal law.

The CFPB said that CashApp’s policies and practices for handling unauthorized transactions were inconsistent and often noncompliant with federal regulations, which require financial institutions to investigate and resolve errors within 10 business days. The agency said that CashApp’s actions resulted in many consumers not receiving refunds for unauthorized transactions, even when the platform’s terms of service promised protection from such losses.

As part of the settlement, CashApp agreed to pay up to $120 million in refunds to affected consumers and a $55 million civil money penalty. The company also agreed to implement a comprehensive compliance plan to ensure that it provides adequate CashApp customer service and fraud protection in the future.

Under the consent order, CashApp must maintain live customer support, available 24 hours a day, with human voice communication for at least 12 hours each day and human chat for at least 18 hours each day. The company must also establish procedures for notifying consumers when their accounts are frozen or closed and for appealing such decisions.

In 2022, CashApp and Block faced a class action lawsuit alleging they failed to safeguard the information of their customers during a December 2021 data breach.

What do you think of the allegations leading to this CashApp fine? Let us know in the comments.

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