Cash App’s parent company paid a nine-figure fee to resolve a dispute with federal regulators, in part over an allegedly useless customer service phone number.
The Consumer Financial Protection Bureau on Thursday ordered Block, which operates popular payments platform and point-of-sale system Square, to refund up to $120 million to users and pay a $55 million fine for failing to properly combat fraud. its service.
According to the agency, Cash App evaded its legal responsibility to investigate complaints from customers who claimed their accounts had been hijacked or were victims of fraud. It also inappropriately blocks unauthorized fee refund requests.
But Cash App also failed to provide a live helpline that users could call if problems arose, the CFPB said in its order. Instead, it provided a phone number that simply directed people back to the app for help — a decision that, the agency claims, cut corners and led to a host of problems that scammers were able to exploit.
"Cash App created the conditions for fraud to flourish on its popular payments platform," CFPB Director Rohit Chopra said in a statement. "When things go wrong, Cash App floutes own responsibility.”
The bureau's claims are similar in some ways to those in a recent lawsuit against Zelle operators, which the bureau also accused of failing to take precautions to prevent fraud or adequately respond to customers who were deceived by scammers.
Read more: Is it safe to save money in apps like Venmo, PayPal and Cash App?
A day earlier, Block, co-owned by Twitter founder Jack Dorsey, agreed to an $80 million settlement with state financial regulators for failing to police money laundering on Cash App.
In both cases, Bullock said, the agreements were related to old problems with his service that have now been resolved. (Thursday’s agreement covers actions taken by the company through 2023). The company also disputes some of the allegations against it.
"While we strongly disagree with the CFPB's mischaracterization, we decided to address this issue in order to put it behind us and focus on what is best for our customers and business," Bullock said in a release.
Still, the complaint provides a practical lesson on the legal value of live customer service agents.
According to the CFPB, Cash App didn't offer a real helpline until 2021, even though its terms of service urged users to call to report account problems. Instead, its debit card includes a phone number that directs customers to file a complaint on the app, but without the option to leave a message.
Some confused customers attempted to search online for another number, which led them to fake websites created by scammers impersonating the company.
“As a result, consumers seeking help from (Cash App) inadvertently contacted fraudsters posing as Cash App customer service representatives and were tricked into providing information that allowed the fraudsters to take over the consumer’s account,” the CFPB wrote.
The agency claims Cash App was aware of the false numbers but failed to alert customers until 2020.
The lack of a valid phone number also creates problems for identity theft victims who don't use Cash App themselves but need to contact the company when a fraudster opens an account in their name.
When customers finally used Cash App, the company was often "slow to respond," the CFPB wrote. Thursday's order will require it to "establish 24-hour on-site customer service."
Jordan Weisman is a senior reporter at Yahoo Finance.
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