According to the Delaware Department of Justice, Block marketed Cash App in a way that suggested users’ money had protections similar to those offered by traditional banks, even though the same protections were not always available. Photo created with AI on 7/11

Block Inc. agrees to $45 million multistate deal over claims it misled consumers and failed to address fraud

WILMINGTON — Delaware will receive more than $314,000 as part of a $45 million multistate settlement with Block Inc. over allegations that the company misled Cash App users about the platform’s safety and failed to adequately protect consumers from fraud.

Attorney General Kathy Jennings announced the settlement with attorneys general from 45 other states. Block, formerly known as Square Inc., operates Cash App, a peer-to-peer payment service that also allows users to receive paychecks, government benefits and other direct deposits.

The states alleged Block violated consumer protection laws by overstating Cash App’s security, failing to properly investigate unauthorized transactions and leaving fraud victims without timely assistance or refunds.

“The strong results achieved in this case are but one example of our office’s ongoing efforts to combat fraud against Delaware consumers in the face of rapidly emerging new financial technologies,” Jennings said. “We are working tirelessly to provide meaningful oversight that keeps pace with new technologies without stifling innovation.”

According to the Delaware Department of Justice, Block marketed Cash App in a way that suggested users’ money had protections similar to those offered by traditional banks, even though the same protections were not always available.

The company encouraged consumers to deposit paychecks and government benefits directly into Cash App and particularly marketed the service to people who were unbanked or underbanked, the department said.

State officials alleged that Block rapidly expanded its user base without developing sufficient fraud prevention systems and customer service resources.

The investigation found that Cash App’s simplified account registration process required limited identity verification, making it easier for scammers to create fraudulent accounts.

For years, Cash App also did not offer telephone customer service. Consumers searching online for help were sometimes directed to fraudulent phone numbers operated by scammers posing as Cash App representatives, according to the settlement.

Those scammers could then gain access to users’ Cash App accounts or other financial accounts.

The states also raised concerns about Cash App Fridays, a social media promotion that encouraged users to publicly post their unique $cashtags for a chance to win prizes. Fraudsters allegedly used the publicly available information to contact users, falsely claim they had won and persuade them to provide account credentials.

Consumers whose accounts were automatically locked because of suspicious activity sometimes waited weeks to regain access to their money, the states alleged. Fraud victims also faced delays that made it more difficult to recover stolen funds.

Under the settlement, Block must maintain customer support systems capable of addressing fraud complaints, account lockouts and other consumer problems.

The company must provide live assistance 24 hours a day, including access to a person by telephone for at least 13.5 hours each day and live chat assistance for at least 18 hours each day.

Block also agreed to stop making misleading claims about Cash App’s safety, discontinue marketing practices known to contribute to fraud, educate users about common scams and properly investigate and reimburse consumers for unauthorized transactions when required by law.

Delaware will receive $314,340.22 from the settlement. The money will be deposited into the state Consumer Protection Fund, which supports the Department of Justice’s Division of Fraud and Consumer Protection.

The settlement also reaffirms Block’s commitment to distribute between $75 million and $120 million to consumers nationwide through a separate settlement with the federal Consumer Financial Protection Bureau.

To Go Box

• What happened: Delaware joined 45 other states in a $45 million settlement with Block Inc., the operator of Cash App.
• Delaware’s share: $314,340.22, to be deposited into the state Consumer Protection Fund.
• What Block must do: Improve customer service, investigate fraud complaints, reimburse qualifying unauthorized transactions and stop misleading safety claims.
• Consumer assistance: Delaware consumers who believe they have been victims of fraud may contact the Delaware Department of Justice Division of Fraud and Consumer Protection.

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