Alabama Joins $45M Cash App Fraud Settlement

Attorney General Steve Marshall announced Thursday that Alabama has joined a $45 million multistate settlement with Block Inc., the parent company of Cash App, resolving allegations that the company misled consumers about the app's security while failing to protect users from fraud.

Alabama will receive $595,421 as part of the agreement, which was negotiated by a bipartisan coalition of 46 State Attorneys General led by Oregon and Texas. The settlement requires Block to strengthen fraud prevention, improve customer service, and change marketing practices that investigators say left consumers vulnerable to scams.

"We have long advised consumers to use caution when using peer-to-peer programs for payments. This settlement sends a clear message that companies offering these services must be transparent, secure, and accountable," Marshall said. "Our office will continue to hold bad actors responsible and fight to ensure that consumers are protected in the digital marketplace."

According to the Attorneys General, Block marketed Cash App as offering protections similar to those of a traditional bank, despite lacking many of the safeguards consumers would reasonably expect. Investigators alleged that the company knew fraud on the platform was rising but continued to aggressively expand its customer base instead of improving security.

The investigation found several practices that allegedly made fraud easier.

State investigators said Cash App allowed users to create accounts with minimal identity verification, making it easier for criminals to open fraudulent accounts. For years, the platform also lacked a customer service phone number, leaving locked-out users to search online for help. Many instead reached fake customer service numbers operated by scammers, who then gained access to victims' accounts and, in some cases, other financial accounts as well.

Investigators also criticized the company's "Cash App Fridays" promotion, which encouraged users to publicly post their unique "$cashtag" on social media for a chance to win prizes. According to the settlement, fraudsters exploited those public posts by posing as Cash App representatives and tricking users into surrendering their login credentials. State officials said Block knew about the scams but continued running the promotion for years.

The settlement further alleges that legitimate customers whose accounts were automatically locked for suspected fraud were often unable to access their money for weeks. In other cases, victims of unauthorized transactions were denied timely investigations or refunds that investigators said were required under consumer protection laws.

As part of the agreement, Block must implement a series of reforms designed to better protect Cash App users. Those include:

• Maintaining customer support capable of resolving fraud complaints and account lockouts.
• Providing live customer service 24 hours a day, including phone support with a live representative available at least 13.5 hours each day and live chat for at least 18 hours daily.
• Ending false or misleading claims about Cash App's security.
• Discontinuing marketing practices known to increase fraud risks.
• Educating users about common scams.
• Investigating fraud complaints and reimbursing consumers for unauthorized transactions when required by law.

Block denied wrongdoing but said the settlement resolves what it described as a "legacy matter" involving historical business practices. The company said it has already made significant investments in customer service, fraud prevention, and regulatory compliance.

"We share the commitment of the attorneys general to addressing industry challenges and continue to invest in operations and technology to promote a safe and healthy financial ecosystem," the company said in a statement.

The agreement is separate from an earlier settlement between Block and the Consumer Financial Protection Bureau (CFPB). Under that federal settlement, Block agreed to provide between $75 million and $120 million in compensation to eligible consumers affected by certain Cash App customer service failures. According to Cash App's settlement website, eligible users do not need to file a new claim for the multistate agreement announced this week.

Cash App users seeking information about the earlier CFPB consumer compensation program can find details through the official settlement website.