NY AG says Cash App exposed vulnerable users to 'rampant fraud'

Key Points:

• Cash App's onboarding controls were so weak that users could bypass identity verification by submitting photos of dolls, and fake accounts under famous names conducted transactions without triggering safeguards, according to class-action court filings and state investigations.
• New York Attorney General Letitia James and a coalition of 45 state attorneys general found that Block Inc., Cash App's parent company, failed to implement adequate fraud protections, exposing many unbanked or underbanked users to scams, leading to a $45 million settlement including penalties for New York and New Jersey.
• Block agreed to reaffirm a previous federal settlement with the Consumer Financial Protection Bureau involving $75 to $120 million in consumer payouts and a $55 million penalty, after being found to have neglected timely fraud prevention and reimbursement measures.
• Investigations revealed Cash App did not require Social Security numbers or birthdates for account creation, permitted unlimited accounts per user, and lacked direct customer support, which scammers exploited by posing as support agents to defraud users.
• The company faced criticism for continuing a social media promotion that encouraged users to share their Cash App identifiers publicly, enabling fraudsters to impersonate winners and steal login credentials, despite Block's awareness of the resulting scams.