Texas Attorney General Ken Paxton (R) has secured a $45 million multistate settlement with Cash App parent company Block, Inc., resolving allegations that the payment platform misled consumers about its security features and failed to protect users from fraud adequately.
What prompted the investigation?
According to the investigation, Cash App promoted itself as a safe, bank-like platform while encouraging users to deposit paychecks and government benefits directly into their accounts.
Investigators alleged that as fraud on the platform increased, the company's consumer protections failed to keep pace with those of traditional financial institutions.
The settlement claims Cash App:
- Used lax identity verification standards.
- Operated for years without adequate phone customer support.
- Allowed deceptive social media promotions that exposed users to scammers.
- Delayed fraud investigations.
- Locked customer accounts without sufficient resolution options.
- Failed to investigate unauthorized transactions and issue refunds as required by law.
Texas is to receive nearly $5 million.
Under the settlement, Texas will receive nearly $5 million from the total $45 million agreement.
Attorney General Paxton said the settlement holds the company accountable for failing to protect consumers who trusted the platform with their finances.
AG Ken Paxton: "When Texans trust a financial platform with their paychecks, savings, and family's security, they deserve to be fully protected as promised. I will make sure that they are."
He added that the agreement ensures harmed Texans can recover what they are owed while sending a message that companies cannot profit from inadequate consumer protections.
Settlement requires stronger consumer protections.
As part of the agreement, Cash App must implement several changes designed to better protect consumers, including:
- Maintaining 24-hour customer support.
- Ending misleading claims about the platform's safety.
- Discontinuing marketing practices that increase fraud risks.
- Investigating unauthorized transactions as required by law.
- Providing reimbursements to eligible users for certain unauthorized transactions.
The Bottom Line
Texas Attorney General Ken Paxton has secured a $45 million multistate settlement with Cash App over allegations that the platform failed to adequately protect users from fraud while marketing itself as a secure financial service.
