Cash App’s parent company is paying nine figures to settle a fight with federal regulators, in part thanks to an allegedly useless customer service phone number.
On Thursday, the Consumer Financial Protection Bureau ordered Block, which runs the popular payment platform as well as the point-of-sale system Square, to return up to $120 million to users and pay a $55 million fine for failing to appropriately combat fraud on its service.
According to the agency, Cash App shirked its legal responsibility to investigate complaints by customers who claimed their accounts had been hijacked or that they had fallen victim to scams. It also inappropriately stonewalled requests for refunds on unauthorized charges.
But Cash App also stumbled by not offering an in-person helpline users could call when something went wrong, the CFPB said in its order. Instead, it provided a phone number that simply directed individuals back to the app for assistance — a corner-cutting decision the agency claims led to a host of problems that scammers were able to take advantage of.
“Cash App created the conditions for fraud to proliferate on its popular payment platform,” CFPB Director Rohit Chopra said in a statement. “When things went wrong, Cash App flouted its responsibilities.”
The bureau’s claims are in some ways similar to those contained in its recent lawsuit against the operators of Zelle, whom it also accused of failing to take precautions against fraud or sufficiently respond to customers who’d been preyed on by scammers.
Read more: Is it safe to store money in apps like Venmo, PayPal, and Cash App?
The announcement comes one day after 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, Block said the agreements related to old issues with its service that had since been resolved. (Thursday’s agreement covers actions taken at the company through 2023). The company also contested some of the allegations against it.
“While we strongly disagree with the CFPB’s mischaracterizations, we made the decision to settle this matter in the interest of putting it behind us and focusing on what’s best for our customers and our business,” Block said in a release.
Still, the complaint offers an object lesson in the legal value of a live customer service agent.
According to the CFPB, until 2021 Cash App didn’t offer a real helpline, even though its terms of service urged users to call it to report issues with their accounts. Instead, its debit card included a telephone number leading to a pre-recorded message instructing customers to file a complaint on the app, without the option to leave a message.
