Block, founded by Jack Dorsey, resolves Cash App fraud allegations with 46 states for $45 million.

      Block, the payments firm led by Jack Dorsey, has agreed to pay $45 million to resolve allegations from 46 US states regarding its mishandling of fraud on Cash App, its money-transfer and digital banking application. This settlement represents a continued shift as state regulators take on roles that the Consumer Financial Protection Bureau (CFPB) has vacated since the Trump administration.

      In a New York court document related to the settlement, Block was accused of misleading customers by claiming that Cash App had the security of a traditional bank and that their funds were FDIC-insured, which would only be true in the event of a partner bank's failure. Regulators further stated that the company had inadequate fraud prevention measures and frequently neglected to investigate incidents of unauthorized transactions.

      A significant detail in the case is that Cash App didn’t provide a live customer-support phone number until 2021, despite the company reportedly being aware of this issue since 2018. Meanwhile, scammers created fraudulent help lines to deceive users into giving away their account access.

      Texas and Oregon spearheaded the investigation, and the $45 million settlement will be distributed among the 46 states involved. Texas will receive $5 million, Oregon $3 million, and New York approximately $1.6 million, according to announcements from the states.

      Block did not admit any wrongdoing and stated it accepted the judgment “solely for the purpose of closing this matter.” A spokesperson described the situation as “a previously disclosed legacy matter primarily concerning historical elements” of the company’s operations and highlighted ongoing investments in consumer protection, customer service, and compliance for the millions reliant on Cash App.

      The app reportedly has around 59 million active users, according to Forbes.

      This settlement should not be confused with previously imposed penalties. In January 2025, the CFPB ordered Block to pay $175 million for broadly similar issues, which included $120 million for customer restitution and a $55 million fine. The new court ruling reaffirms the $120 million restitution requirement, which remains intact despite the administration dismissing many other CFPB actions from the Biden era, including one against the bank-owned app Zelle. Following the significant downsizing of the bureau this year, coalitions of state regulators have increasingly taken up cases that the CFPB has abandoned, as reported by Forbes.

      Block’s regulatory challenges have been escalating. Over the last two years, it has faced more scrutiny than nearly all other fintechs, including an $80 million multi-state fine and a separate $40 million penalty from the New York Department of Financial Services, both concerning anti-money-laundering deficiencies.

      As part of the new agreement, Block committed to developing a “comprehensive compliance management system,” correcting any exaggerations regarding its fraud protections, maintaining live phone support for a minimum of 13.5 hours daily, and addressing complaints about unauthorized transactions within three business days. Several state attorneys general also emphasized the importance of having customer service available around the clock.

      The implications of the case may extend beyond Cash App. New York Attorney General Letitia James is investigating Early Warning, the bank-owned operator of Zelle, over claims that it allowed fraud to proliferate, with analysts suggesting a connection to the Block allegations.

      “The significant settlement with Cash App makes a negotiated settlement with Zelle more probable, as the fundamental claims regarding fraud risk disclosures and prevention are similar,” stated Todd Baker, a senior fellow at Columbia University’s business and law schools.

      Early Warning has disputed the allegations, telling Forbes that fraud against Zelle users is “always exceptionally low” and calling the lawsuit “baseless.” Baker warned that the Zelle case might be more difficult to win, as the compliance responsibilities lie with the banks that co-own the network, rather than Zelle itself, and the service does not attract customers in the same manner as Cash App. The next step will be a ruling on Zelle’s motion to dismiss.