Block Inc., owner of Cash App, settles two disputes with WA

Attorney General Nick Brown today announced two separate settlements with Block, the company behind the peer-to-peer payments app Cash App.

First, the Attorney General's Office (AGO) reached a $20 million settlement resolving its investigation into how Block handled fraudulently transferred unemployment deposits into Cash App accounts from Washington's Employment Security Department during the pandemic. That settlement was filed in King County Superior Court.

Second, Washington and a multistate coalition have resolved allegations the company misled consumers about Cash App's safety, failed to protect users from fraud, and did not meet its own promises to consumers and obligations under the law. Washington will receive $1.8 million as part of a $45 million multistate settlement.

For years, Block actively promoted direct deposits of paychecks and government benefits into Cash App. It made a particular push to reach unbanked and underbanked consumers, people who would often rely on Cash App as their primary financial account, and who were especially vulnerable to fraud. Block grew its user base without making sure it could support those users when problems arose.

"Block presented Cash App as a safe alternative to a traditional bank but failed to create the robust protections and safeguards that Washington law requires," Brown said. "This is further notice that our office will fight back to protect consumers and taxpayers and hold financial companies accountable when they engage in deceptive practices."

Unemployment benefits investigation

Starting in August 2020, the AGO began investigating Washington's loss of more than $648 million from identity theft and unemployment benefits fraud during the COVID-19 pandemic.

The AGO filed 26 complaints and 37 motions for forfeiture between August 2021 and September 2023 that returned $41.5 million in stolen funds to the Washington Employment Security Department. In an initial phase of the investigation, the AGO recovered more than $105,000 in unemployment funds held in Block accounts through a forfeiture complaint. Block was not a defendant and cooperated with the state's forfeiture efforts.

The settlement announced today resolves the second phase of the AGO's investigation as to Block. The second phase was part of the AGO's ongoing work to hold financial companies accountable for failing to maintain anti-fraud controls to detect suspicious unemployment benefit transfers during the pandemic. This is the second settlement reached by the AGO for this phase, the first being with Metropolitan Commercial Bank.

The AGO alleged that between March and August 2020, at least $22 million in unemployment benefits from ESD were fraudulently transferred through Cash App accounts as a result of criminals applying for benefits using Washingtonians' stolen personally identifiable information, and that Block's actions in connection with these transfers violated Washington's Consumer Protection Act.

Multistate settlement

The multistate settlement, which was led by the attorneys general of Oregon and Texas, reaffirms Block's commitment to distribute between $75 million and $120 million to compensate consumers nationwide as part of a settlement with the Consumer Financial Protection Bureau (CFPB). Additional information regarding the CFPB's settlement is available at: https://cashappcfpbsettlement.com/. (Our office has confirmed this is a legitimate website, though it may not work on the Edge web browser. We recommend consumers use the Chrome browser or call the Cash App call center at (888) 832-1301.)

The multistate coalition alleged that Block told Cash App users their money was safe, implying that the app worked like a bank with the same protections, which wasn't true. At the same time, Block knew fraud on its platform was rising sharply and instead of warning users or strengthening protections, it doubled down on marketing.

Block's policies didn't just fail to stop fraud-in several ways they made it easier:

• 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 for years and kept running the promotion anyway.

Block's failure to provide adequate customer service and to fulfill its promise to protect users from fraud had real consequences for people's finances. Innocent users who experienced automated account locks for suspicious transactions were frequently locked out of their accounts for weeks without a way to access their money. Victims of fraud through the app were often left with no recourse, because delays made it impossible to get stolen money back from scammers and because Block failed to investigate unauthorized transactions and failed to issue refunds when required by law.

Under the multistate settlement, Block has agreed to implement and maintain responsible practices to resolve these issues, including to:

• 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.

The two settlements with Block are the result of the hard work of many people at the AGO.

The team that worked on the multistate settlement includes Assistant Attorneys General Will O'Connor and Andrea Alegrett and Paralegals Keriann Snider and Jen Killoren.

The AGO team that has worked for the past five years on the investigation related to pandemic-era unemployment benefits includes Assistant Attorneys General Spencer Coates, Aaron Fickes, Erica Franklin, John Nelson, Susan Park, Tyler Roberts, Todd Sipe, and Jonathan Tebbs; Deputy Solicitors General Cristina Sepe and Freeman Halle; Division Chief Jeff Rupert; and Paralegals Courtney Carnes, Viviana Cook, Connor Hopkins, Victoria Johnson, Jeanine Lantz, Mark O'Neal, and Kellie Tappan; and Investigator Greg Coleman.

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