CFPB: Block Must Pay $175 Million for Cash App’s ‘Weak Security Protocols’

The Consumer Financial Protection Bureau ordered Cash App owner Block to pay $175 million to address security failures.

Block must refund consumers up to $120 million and pay a penalty of $55 million into the CFPB’s victims relief fund, according to a Thursday (Jan. 16) press release.

“Block employed weak security protocols for Cash App and put its users at risk,” the release said. “While Block is required by law to investigate and resolve disputes about unauthorized transactions, the company’s investigations were woefully incomplete. Block directed users — who had suffered financial losses as a result of fraud — to ask their bank to attempt to reverse transactions, which Block would subsequently deny. Block also deployed a range of tactics to suppress Cash App users from seeking help, reducing its own costs.”

Block said in a statement that it settled the case not because it agreed with the CFPB’s findings but because it wanted to be done with the matter.

“The historical issues raised in this agreement do not reflect the Cash App experience today,” the company said in the statement. “We are committed to continually investing to ensure we uphold industry-leading standards.”

Block now offers multiple points of contact, uses “advanced” detection systems to prevent fraud, and employs an artificial intelligence-powered “Payment Warnings” tool that alerts customers if their transaction may be part of a scam, the statement said.

The news came one day after Block agreed to pay an $80 million fine and undertake corrective actions to resolve an enforcement action centering on Cash App and carried out by 48 state financial regulators.

Those regulators alleged the company violated Bank Secrecy Act (BSA) and anti-money laundering (AML) laws. In addition to the fine, Block agreed to hire an independent consultant to review its BSA/AML program, submit a report to the states within nine months, and correct any deficiencies found in the review within 12 months of filing the report.

A spokesperson for Block told PYMNTS that the agreement resolved a previously disclosed matter having to do with Cash App’s past compliance program.

“As Cash App has grown, we’ve significantly increased our investment in compliance and risk management, while serving millions of customers with critical, affordable financial services,” the company said in a statement issued to PYMNTS. “We share our regulators’ commitment to addressing industry challenges and will continue to invest across our operations to help promote a safe and healthy FinTech ecosystem.”

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