Cash App fined $255 million in successive resolutions.
Most of this will be allocated to Cash App users.
Cash App will face a payment of $255 million due to various settlements related to consumer protection. Block, the parent company of Cash App, agreed on Wednesday to pay $80 million to 48 states that fined the company for violating laws designed to keep illicit activity off the platform. According to a statement from the Conference of State Bank Supervisors, it was determined that Block failed to meet certain requirements, creating the possibility that its services could be used for money laundering, terrorist financing, or other illegal activities.
On the other hand, on Thursday, the Consumer Financial Protection Bureau (CFPB) reached a settlement with Block, in which the company agreed to pay up to $120 million to Cash App customers and another $55 million to the CFPB. The federal agency highlighted that Cash App's low security measures exposed consumers to risks and hindered their ability to receive assistance after experiencing fraud on the platform. Cash App is also accused of misleading users into believing that their bank, rather than the app itself, was responsible for handling disputes, and that Cash App's customer service was "minimal and ineffective," leaving the platform vulnerable to scams.
Lena Anderson, a spokesperson for Block, stated in an email that the company has reached an agreement with a group of state regulators led by Arkansas, California, Florida, Maine, Massachusetts, Texas, and Washington to address a previously disclosed issue primarily related to Cash App's former compliance program. Anderson added that as Cash App has grown, the company has significantly increased its investment in compliance and risk management while serving millions of customers with affordable and critical financial services. “We share our regulators' commitment to addressing the industry's challenges and will continue to invest in our operations to promote a safe and healthy fintech ecosystem,” she asserted.
The regulation of peer-to-peer money transfer apps, such as Cash App, remains a topic of debate. This week, NetChoice and TechNet filed a lawsuit challenging the way the CFPB handles these platforms, deeming it an "illegal abuse of power." Similarly, Google had filed a lawsuit in December.
