The Cash App enables users to transfer money electronically, receive direct deposits, and utilise a prepaid card, Cash Card, for purchases and ATM withdrawals. Credit: Diego Thomazini / Shutterstock.

The Consumer Financial Protection Bureau (CFPB) has mandated Block, the company behind Cash App, to provide refunds and other redress to consumers amounting to up to $120m and to pay a $55m penalty into the CFPB’s victims relief fund.  

This enforcement action comes because of Block’s inadequate security measures and improper handling of unauthorised transaction disputes on its Cash App platform. 

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According to the CFPB, Block’s security protocols for Cash App were insufficient, exposing users to potential fraud.  

The company failed to conduct thorough investigations into disputes over unauthorised transactions as required by law.  

Instead, Block advised users who had suffered financial losses due to fraud to seek transaction reversals from their banks, which Block would then often reject. 

Block operates several digital payment products, including Square for businesses and Cash App for consumers.  

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Cash App, a peer-to-peer payment platform in the US, has over 56 million users.  

The app enables users to transfer money electronically, receive direct deposits, and utilise a prepaid card, Cash Card, for purchases and ATM withdrawals. 

The CFPB’s order outlines that Block should improve its customer service and dispute investigation processes.  

This includes establishing a 24-hour live customer service and conducting full investigations into unauthorised transactions, providing timely refunds were due. 

In addition to the CFPB’s penalties, state regulators have imposed a separate $80m fine on Block for violations of the Bank Secrecy Act and anti-money laundering laws.  

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

Block agreed to settle the matter, while refuting the allegations.  

In a statement, Block said: “We reached an agreement with the Consumer Financial Protection Bureau to resolve a previously disclosed matter principally related to certain aspects of Cash App’s historical customer service programme.  

“While we strongly disagree with the CFPB’s mischaracterisations, 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.”