Cash App ordered to pay $255 million in penalties for fraud

Cash App, the smartphone payment tool that allows instant money transfers and popular with young people, has brought billions in profits for Block, the technology conglomerate led by billionaire Jack Dorsey.

According to settlements reached this week with federal and state regulators, the company was able to accomplish this by making it virtually impossible for users to recover money lost in fraudulent transactions.

The Consumer Financial Protection Bureau said the company delayed refunds and misled its 50 million users about responsibility for repaying their debts. When users reported fraudulent transactions to Cash App, instead of investigating the matter, the company directed them to their banks.

The federal regulator also said the company made it harder for fraud victims to report claims, mixing them between its website and a phone number with a recorded message directing them to visit the website. The goal, regulators said, was to exhaust customers so much that they eventually gave up.

The company encouraged its customer service employees to avoid resolving user fraud complaints and used two internal metrics – “success rate” and “loyalty rate” – to measure the proportion of customer service requests. chargeback that she was able to avoid, according to a settlement reached Thursday with the consumer office.

Cash App, along with Venmo and Zelle, is part of the growing collection of peer-to-peer payment apps that allow individuals and businesses to transfer money. Cash App is particularly popular with black and Hispanic users, as well as those under 50. Alongside similar payment tools, it has long been the subject of complaints of fraud and scams.