- Utah will received almost $500,000 as part of a settlement with the company behind the payment system Cash App.
- The company's actions increased the risk of fraud on its platform, according to a lawsuit filed by Utah Attorney General Derek Brown.
- Lawsuits say the company didn't do enough to prevent fraud on its platform.
SALT LAKE CITY — Utah will receive almost $500,000 as part of a multistate settlement against the company behind Cash App, the state's Division of Consumer Protection announced Wednesday.
Block, Inc., the company behind the payment application, reached a settlement totaling $45 million with 46 state attorneys general who had sued the company for allegedly misleading users about fraud prevention measures and creating a sign-up process that made it easy for scammers to create accounts.
Cash App allows users to store money, make and receive payments, spend money and make investments.
The company's actions increased the risk of fraud on its platform, according to a lawsuit filed by Utah Attorney General Derek Brown in Utah's 3rd District Court.
In one case, Block ran a promotion known as "Cash App Fridays," where users could enter a weekly giveaway by responding to a post with their usernames.
The giveaways were popular, and fraudsters began targeting users "by posing as Cash App employees and tricking users to provide their log-in credentials," according to Utah's lawsuit.
"Cash App knew at least as early as 2019 that these promotions led to increased fraud and account takeovers," the suit states. "Instead of halting this promotion to bring an end to this known fraud, Block continued the promotion for years and simply trained its staff to expect to receive communications from Cash App users who were subjected to this fraud."
Public marketing by Block "created the impression that Cash App offered safety protections comparable to those of traditional banks, even though Cash App is not a bank and not subject to the same safety requirements," the complaint said.
The lawsuit also alleged the company failed to notify users and respond to questions about issues in a timely manner.
Block did not immediately respond to a request for comment.
"This settlement marks a pivotal step in safeguarding Utah consumers. Block prioritized rapid expansion over essential security and customer support," said Katie Hass, director of the Division of Consumer Protection. "It lured consumers with false promises of safety and preyed on vulnerable, low-income families who relied on Cash App for their financial stability, leaving them exposed to fraud without recourse."
Under the settlement, the company has also agreed to make several changes to how it conducts business, according to the division. It will maintain live support 24 hours a day, stop marketing tactics known to increase fraud, educate consumers on common types of fraud and reimburse users for unauthorized transactions.
"By enforcing rigorous new standards for fraud protection, live customer support, and honest marketing, we are holding the company accountable and ensuring that Utahns finally have the reliable, protected financial services they were promised."
Utah will receive $482,183 under the settlement, which will be deposited into the state's Consumer Protection Education and Training Fund, according to court documents.
