Block Inc., led by Jack Dorsey, has consented to a $45 million settlement with 46 U.S. states over allegations that its popular Cash App failed to protect users from rampant fraud and misled them about the safety of their funds. The bipartisan coalition of attorneys general, spearheaded by Oregon and Texas, accused the payments company of marketing Cash App as offering bank-level security while lacking basic fraud detection and customer support.
New York Attorney General Letitia James stated, “New Yorkers were promised that Cash App was a safe and secure platform to send money, but in reality, the app exposed them to rampant fraud. For years, Cash App users lost money to costly scams because Block cared more about profits than protecting its users.”
The investigation found that Cash App’s sign-up process prioritized speed over security, allowing scammers to easily create a web of fake accounts. For years, the service had no functioning customer hotline, forcing locked-out users to search online and call numbers operated by fraudsters posing as support staff. Those criminals then seized accounts or drained linked bank balances. A live phone line was not established until 2021, years after the app gained mainstream traction.
The states also identified a heavily promoted marketing campaign called “Cash App Friday,” where users posted their unique $cashtag for a chance to win prizes. Regulators said fraudsters used those public identifiers to contact users, falsely tell them they had won, and trick them into handing over login details. Block was aware of the scams but kept the promotion running, training its own staff to anticipate calls from defrauded customers. Meanwhile, the company’s terms of service touted “cutting-edge” fraud detection technology that New York’s probe concluded did not exist in any consistent form.
The $45 million settlement will be split among the participating states—for instance, New York will receive $1.6 million, Washington $1.8 million, and Connecticut $1.5 million—rather than paid to individual victims. However, a separate January 2025 order from the Consumer Financial Protection Bureau already required Block to set aside between $75 million and $120 million in consumer redress, alongside a $55 million CFPB fine. Washington separately secured an additional $20 million settlement over more than $22 million in pandemic unemployment benefits that were stolen and funneled through Cash App accounts.
Under the consent judgment, Block must maintain live customer support by phone for at least 13.5 hours per day and via chat for at least 18 hours. The company is barred from making misleading safety claims and from running marketing promotions that expose users to undue fraud risk.
Block denied wrongdoing, saying in a statement that the agreement “resolves a previously disclosed legacy matter” and that Cash App has invested significantly in consumer protection and compliance. Still, the settlement comes during a turbulent period for the publicly traded firm (NYSE: XYZ). Block posted a $308.7 million net loss in Q1 2026 and recently announced plans to cut over 4,000 jobs. Separately, it disclosed in May that it is negotiating settlement proposals with the U.S. Department of Justice concerning compliance and risk practices.
Industry observers note that the action illustrates a broader regulatory shift: apps offering bank-like services will increasingly be held to bank-like consumer protection standards, regardless of how they label themselves. Higher compliance costs and limits on marketing claims could reset profit expectations across the fintech sector.
