Consumer watchdog catches Cash App, orders $175 million in refunds & fines

The Consumer Financial Protection Bureau (CFPB) issued an order requiring Block, Inc., the operator of the popular peer-to-peer payment platform Cash App, to pay $120 million in consumer redress plus a $55 million penalty into the CFPB’s victims relief fund.

The CFPB found that Block employed inadequate security protocols for Cash App, failed to properly investigate disputes regarding unauthorized transactions, and engaged in practices that suppressed consumer efforts to seek help.

Cash App, which has more than 56 million users, allows consumers to send and receive money, accept direct deposits, and use a prepaid debit card, Cash Card. However, the CFPB’s investigation revealed that Block’s handling of fraud disputes and its customer service system created significant risks for users.

Consumers who suffered financial losses due to fraud often found their complaints inadequately investigated or dismissed outright. Block had a policy of directing users to request their banks to reverse unauthorized transactions, but then denied these claims, placing the burden on local banks and exacerbating the situation for victims.

“Cash App created the conditions for fraud to proliferate on its popular payment platform,” said CFPB Director Rohit Chopra. “When things went wrong, Cash App flouted its responsibilities and even burdened local banks with problems that the company caused.”

In its order, the CFPB outlined specific actions Block is required to take to address its failures:

1. Refunds and Redress: Block must pay up to $120 million in refunds and other redress to consumers who were affected by its inadequate investigations of unauthorized transactions, failed to receive refunds, or whose accounts were locked for extended periods. The minimum amount of redress will be $75 million, and the CFPB will ensure that consumers receive these payments without needing to take further action.
2. Improving Customer Service and Investigations: Block is required to establish 24-hour live-person customer service and to fully investigate disputes related to unauthorized transactions. The company must also ensure timely refunds where appropriate.
3. Financial Penalty: Block will pay a $55 million penalty into the CFPB’s victims relief fund, which is designated to support consumers harmed by financial misconduct.

Additionally, state regulators have separately ordered Block to pay $80 million for violations related to the Bank Secrecy Act and anti-money laundering laws.

Block, which is headquartered in Oakland, California, is best known for its digital payments products, including the widely used Cash App. In 2023, the company reported a gross profit of approximately $7.5 billion, with roughly $4 billion coming from Cash App.

The company’s efforts to limit its investigative responsibilities through its Terms of Service were called into question. For example, Cash App’s terms led consumers to believe that disputes should be handled by their linked banks, but federal law mandates that peer-to-peer platforms like Cash App must directly investigate unauthorized transactions.

Moreover, the company’s customer service was found to be severely lacking. While Cash App listed a telephone number for customer support, it often led consumers to a pre-recorded message directing them to the app, where they experienced delays, inadequate responses, and, in some cases, fraudulent support attempts by third-party scammers.

The CFPB has been increasingly active in overseeing payment platforms and ensuring compliance with consumer protection laws. In November 2024, the agency finalized a rule to subject large nonbank payment platforms to oversight similar to that of large banks. Last month, the CFPB also filed lawsuits against major banks for enabling fraud on the Zelle payment network.

Consumers affected by these issues can file complaints with the CFPB through its website or by calling (855) 411-CFPB. The CFPB is also encouraging employees to report potential violations of consumer financial protection laws via its whistleblower program.

The order against Block is part of a broader effort by the CFPB to ensure that digital payment platforms operate transparently, fairly, and in compliance with federal laws designed to protect consumers.