Michigan will receive nearly $1 million as part of a multi-million-dollar, multi-state settlement over the “deceiving” practices on Cash App, the state’s attorney general announced on Thursday.
Michigan Attorney General Dana Nessel announced on July 9 that the $45 million multi-state settlement resolves allegations that Block, the company behind the popular peer-to-peer payments app, misled consumers about the safety of Cash App and did not protect users from fraud.
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“Customer safety should always be a top priority, and when a company misleads and fails to protect its users from fraud, it must be held accountable,” said Nessel. “This settlement requires Cash App to maintain strong safeguards for consumers and commits the company to putting stolen money back into the pockets of Michigan residents. Throughout my time in office, we have worked with multistate coalitions to halt deceptive business practices, and we will continue to pursue corporations that try to put their bottom line over the people of Michigan.”
According to Nessel’s office, Block told Cash App users that their money was safe, implying the app worked like a bank with the same protections -- which Nessel said was not true.
The attorney general’s office said Block promoted direct deposits of paycheck and government benefits into Cash App. Block reportedly grew its user base without ensuring it could support those users when problems arose.
Nessel said Block’s policies made fraud easier, including the following:
- Block’s sign-up process was reportedly 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.
Michigan will receive $936,540 of the $45 million multi-state settlement.
Block has also agreed to implement and maintain responsible practices to resolve these issues, including:
- 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.
Block will also distribute between $75 million and $120 million to compensate consumers nationwide as part of a settlement with the Consumer Financial Protection Bureau. Additional information regarding the CFPB’s settlement is available on the CFPB’s website and Cash App settlement website.