Cash App is an easy way to exchange money - from your phone to someone else’s in an instant.
It’s also a way to receive payments - from a contract job or other source of income.
And, it’s also a place where there’s a fair amount of fraud.
Payments for products or services that don’t materialize, attempts to extract money under false pretenses, and just plain swindles all happen on the app.
While financial fraud is not unique to Cash App, the App’s solution to fraud is: Cash App creates a maze of deflection that prevents users from recovering cash, and in some cases, causes even more losses.
Now, though, Cash App is facing the consequences in the form of $255 million in fines from both federal and state regulators.
First, the Consumer Financial Protection Bureau (CFPB) fined Cash App $175 million - including $120 million in direct payments to customers - for its mishandling of fraud cases.
Consumers who use Cash App typically connect bank accounts to the app. When a fraudulent transaction was reported by a customer, Cash App would direct them to ask their bank to reverse the transaction. Then, Cash App would block that transaction at the app level - leaving the customer without their money and the bank involved in a transaction that originated on the Cash platform.
Next, a group of state regulators fined Cash App $80 million for its role in facilitating money laundering:
A multistate settlement reached with payment processor Cash App (owned by Block, Inc.) says the company failed to establish proper guardrails to prevent money laundering on the platform. The failures violated anti-money laundering laws designed to protect America's financial system from illicit use.
Cash App positions itself as a nonbank provider of key financial services. But, in its handling of fraud, Cash App hardly differs from the big banks that leave customers without resolution in fraud cases.