States split $45M fraud settlement from Cash App parent company Block

Block (NYSE: XYZ) agreed to pay $45 million and rebuild Cash App’s fraud protections to settle claims from 46 state attorneys general that it misled users about the app’s safety and abandoned fraud victims, the coalition announced Wednesday.

The bipartisan group, led by Oregon and Texas, said the payments company assured Cash App’s 56 million-plus users that their money was as safe as it would be in a bank, even as fraud on the platform climbed.

New York Attorney General Letitia James, who helped secure the deal, said Block “cared more about profits than protecting its users.”

Who gets the money?

The $45 million will be shared by the participating states rather than paid to consumers directly.

New York takes $1.6 million in penalties, Washington takes $1.8 million, Connecticut collects $1.5 million, while New Jersey gets $892,753, and Massachusetts gets $730,000. Nebraska gets just $379,619.99, Attorney General Mike Hilgers said.

Consumer refunds are a whole different ballgame. The deal reaffirms an earlier promise from Block to distribute between $75 million and $120 million to fraud victims nationwide following a January 2025 order from the Consumer Financial Protection Bureau (CFPB).

Block was fined $55 million by the Bureau and was required to pay a maximum of $120 million in redress, with a $75 million floor.

The practices that caught the eye of regulators

Investigators said Cash App’s signup process put speed over anything else, including security. A fraudster could easily run a web of scam accounts, the state of New York alleged.

Customer service was another gaping hole. For years, Cash App had no working phone line, so locked-out users searched the web and reached fake numbers run by scammers posing as customer support staff. Those “callers” then seized accounts or drained linked bank balances, and Block failed to set up a real phone line until 2021, James’s office said.

Block’s marketing giveaway created a third problem. Under its marketing promo called “Cash App Fridays,” the company urged users to post their $cashtag, the app’s unique username, for a chance at a weekly prize.

Scammers messaged contestants with fake winning notices and tricked them into handing over login details. The states said Block was aware of the pattern of fraud but ignored it and kept the promotion running for years.

In its terms of service, Block claimed “cutting-edge” fraud detection technology, New York’s investigation found, even though it had no consistent system in place.

What Block has to change

The consent order requires Block to provide live customer support in the form of a person reachable by phone for at least 13.5 hours a day and at least 18 hours by chat. The ruling mandated Block to stop making misleading claims or leaning into marketing tactics with undue fraud exposure.

Washington pursued a second case parallel to this one. Brown’s office announced a separate $20 million settlement over Block’s mishandling of unemployment money stolen during the pandemic.

The state said over $22 million in Unemployment Benefits was processed through Cash App accounts in 2020 after criminals filed claims using stolen identities of Washingtonians.

Pressure mounts on Dorsey’s payments business

The settlements arrive during a rough stretch for Block, which trades on the NYSE under the ticker XYZ. The Jack Dorsey-led firm posted a $308.7 million net loss for the first quarter of 2026, even as Cash App gross profit rose 38%, Cryptopolitan reported in May.

Block, which holds Bitcoin on its balance sheet and earns revenue from Bitcoin sales through Cash App, has also said it would cut more than 4,000 jobs.

Other regulatory fronts are closing, too. In a May securities filing, Block stated that it was negotiating settlement proposals with the U.S. Department of Justice over its compliance and risk practices.

Meanwhile, the Securities and Exchange Commission had ended a separate investigation without an enforcement action.

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