Everyone’s go-to digital wallet could owe you money. The peer-to-peer payment application, Cash App has been ordered to pay damages to its users to compensate for weakened security measures. $175 million will be paid to users of the app by its parent company, Block.
What is Cash App?
As the name would suggest, Cash App is an application used for various forms of money transfer. Users create an account on the platform and can then use it for just about anything finance related. Users can send and receive money, file taxes, apply for loans, and invest in stocks or Bitcoin. The payment platform also offers a prepaid Cash Card that users can make purchases and ATM withdrawals with.
Block on the chopping block
Last week, an independent federal agency known as The Consumer Financial Protection Bureau (CFPB) has issued an order for the parent company of Cash App, Block, to refund $120 million to Cash App users. A further $55 million payment is also expected of the company to be paid into the Consumer Financial Protection Bureau’s Civil Penalty Fund. This fund exists to provide money to people who have been “harmed by companies that break federal consumer financial protection laws.”
Block had been required by law to investigate and resolve unauthorized transaction disputes but failed to do so. The CFPB’s investigation into the matter revealed that Block had merely instructed users who suffered financial losses to ask their banks to reverse the charges and made no attempt to remedy the matter themselves.
Cash App is being accused of trickery within its Terms of Service to avoid investigative obligations. The Terms of Service lead users to believe that any disputes are the responsibility of their linked banks. The Bureau also claims that Block withheld “meaningful and effective customer service” to its users. For many years, customers were only able to contact customer service through the app or the U.S. mail despite there being a telephone number on the back of the Cash Card.
How can users claim?
Block has denied any allegations and is calling them “mischaracterizations” but the company has agreed to fulfil the Consumer Financial Protection Bureau’s orders to pay its users.
According to the CFPB, users will not have to take any action to receive compensation. Instead, the agency will identify users and ensure payments are made.
USA Today has outlined users that qualify as follows:
- Consumers who did not receive refunds to which they were entitled for fraudulent transactions.
- Consumers whose accounts had unauthorized transfers or transactions not adequately investigated by Cash App and Block.
- Consumers who had accounts locked as a result.
- Consumers who did not receive provisional credits during delayed investigations.
Two preliminary options for fund delivery has been outlined by the courts. These include payment in the form of Cash App credit to users who have used the app within the last 6 months and non-credit payments separate from the app for users who have not transacted on the app within the last 6 months.
In addition to the payment, Block has also been instructed to establish a live, 24-hour customer service and fully investigate all unauthorized transactions. A statement shared by Block claims, “The historical issues raised in this agreement do not reflect the Cash App experience today”. The statement also alleges that Cash App offers multiple avenues for users to be assisted by customer service. Cash App claims customer service can be accessed by means of live phone calls, email, “real-time” in-app messaging and a dispute submission tool through the app.
The app also makes use of “advanced detection systems, (artificial intelligence) and machine learning” and “robust security measures” like facial recognition to unlock the mobile app.