CFPB Orders Block to Pay $255 Million for "Compliance and Fraud Failures"

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Block, the parent company of Cash App, has agreed to pay an
$80 million fine as part of a settlement with 48 state financial regulators
over violations of the Bank Secrecy Act (BSA) and anti-money laundering (AML)
regulations.

The state regulators found that Block failed to meet certain
customer due diligence requirements, potentially allowing its services to be
used for money laundering or terrorism financing.

Block to Refund $120 Million, Pay Penalties

As part of the settlement, Block will also hire an
independent consultant to review its BSA/AML program and submit a report to the
states within nine months. The company will have 12 months to address any
deficiencies identified in the review.

In a separate action, the Consumer Financial Protection
Bureau (CFPB) has ordered Block to refund up to $120 million to consumers and
pay a $55 million penalty to the CFPB’s victims relief fund. The CFPB found
that Cash App, Block’s mobile payment service, had weak security protocols and
allowed fraudulent activity to proliferate.

CFPB Orders Block to Improve Dispute Resolution

The investigation revealed that Block’s process for handling
unauthorized transaction disputes was inadequate. Block directed users to their
banks for transaction reversals, but the company would deny these requests. The
CFPB also found that Block employed tactics to suppress users from seeking
help, reducing the company’s costs.

In addition to the financial penalties, the CFPB has ordered
Block to implement 24-hour live customer service, fully investigate
unauthorized transactions, and provide timely refunds where appropriate.

This article was written by Tareq Sikder at www.financemagnates.com.

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