US consumer finance watchdog fines payments firm Block over Cash App operations
The Consumer Financial Protection Bureau (CFPB) has fined payments firm Block $175 million for fraud and weak security protocols on its Cash App. The CFPB stated that Block failed to provide effective customer service and allowed fraud to proliferate. Block disagrees with the CFPB's claims but chose to settle to focus on its customers. This action is one of the last regulatory moves under the Biden administration, as the company also agreed to pay $80 million to state regulators for insufficient policies.
Jan 16 (Reuters) - The Consumer Financial Protection Bureau (CFPB) on Thursday ordered payments firm Block (SQ.N) to pay a penalty citing fraud and weak security protocols on its mobile payment service Cash App.
The regulator said Block deprived Cash App users of meaningful and effective customer service and left the network vulnerable to criminals defrauding users.
The move is one of the final regulatory actions under the Biden administration as Washington awaits the inauguration of President-elect Donald Trump.
Billionaire Elon Musk, who is slated to co-head a new government agency to slash government spending, has called for the elimination of the CFPB.
The order includes up to $120 million in redress to consumers and a $55 million penalty to be paid into the CFPB’s victim relief fund.
“Cash App created the conditions for fraud to proliferate on its popular payment platform,” said CFPB Director Rohit Chopra in a statement.
Block said the issues raised by the CFPB were “historical” and did not “reflect the Cash App experience today.”
“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,” the company said.
On Wednesday, Block also
agreed
to pay $80 million to a group of 48 state financial regulators after the agencies determined the company had insufficient policies for policing Cash App.
