Cash App, the smartphone payment app that allows users to make transfers, will be forced to pay $12.5 million for sending unsolicited text messages to Washington users. The class-action lawsuit was filed in 2023, alleging that Block violated the Washington Consumer Email Act and the Washington Consumer Protection Act. Block is a company that offers various digital payment products and the Cash App consumer payment service.
Block had inadequate security protocols for Cash App
The order comes from the Consumer Financial Protection Bureau (CFPB) after discovering that Block had inadequate security protocols for Cash App that put its users’ privacy and security at risk. Cash App is one of the largest payment platforms in the United States, and since its launch in 2013, its user community has grown steadily. From 7 million monthly active users in 2017 to 30 million in 2020, and now has more than 56 million accounts.
For his part, Block earned approximately $7.5 billion in gross profit in 2023, of which approximately $4 billion was generated by Cash App. Now, under the terms of the Cash App spam texts class action settlement, Block will establish a $12.5 million settlement fund to provide pro rata payments to class members who submit a timely and valid claim form.
The company also used several tactics to discourage Cash App users from seeking help
It’s not just that. During the investigation, it was discovered that Block directed users who had suffered financial losses due to fraud to seek help from their banks to reverse transactions, which were then denied. The company also used several tactics to discourage Cash App users from seeking help, thereby reducing its own costs.
The lawsuit, filed by Kimberly Bottoms, will benefit consumers who received a text message from Cash App’s referral program while residing in Washington between November 14, 2019, and the last date that will be provided to the settlement administrator identifying phone numbers with Washington area codes.
“Cash App created the conditions for fraud”
For his part, CFPB Director Rohit Chopra stated: “Cash App created the conditions for fraud to proliferate on its popular payments platform. When things went wrong, Cash App shirked its responsibilities and even saddled local banks with problems the company itself had caused.”
Although on Block’s website the company refers to the fact that the most important thing is the security of its users, this truth has been called into question. “We know we play a critical role in our customers’ financial lives. We are committed to ensuring a safe and secure experience on Cash App, as well as relentless self-assessment to improve our platform. This means ensuring our customers have access to the tools and support they need when they need it.”
Lawyers estimate that each plaintiff will receive between $88 and $147
The settlement fund will also cover administrative costs, attorneys’ fees, and compensation for services rendered to the class representative. Each class member who files a valid claim will receive a share of the settlement fund. Lawyers estimate that each plaintiff will receive between $88 and $147, or between 17% and 29% of the $500 damages award for each violation of the Washington Commercial Email Act.
According to the CFPB, Block’s fine could reach $175 million and at least drop to $130 million. “This work is never done. We remain committed to doing business responsibly while proactively taking initiative and independent action to better serve our customers,” Block maintains in his official statement.
