Connecticut Joins Settlement With Cash App Owner Block, Inc., For Violations And Security Failures

HARTFORD, CT – The Connecticut Department of Banking has announced that a multistate enforcement action against Block, Inc., the parent company of Cash App, has ended with a nearly $80-million settlement for violations of the Bank Secrecy Act and anti-money laundering regulations.

According to the banking department, the action involves regulators from 49 states and the District of Columbia. Connecticut is expect to receive about $1.6 million, which will be deposited into the state's general fund.

As part of the settlement, Block will pay $79.07 million in administrative penalties and $925,000 in costs based on the company's failure to implement adequate compliance programs that resulted in vulnerabilities for money laundering and other illicit activities.

In response, the banking department said Block has agreed to a corrective action plan, including hiring an independent consultant to assess its compliance and also agreeing to submit periodic progress updates.

"I am grateful for the work of my fellow regulators who took the lead in this enforcement action," Banking Commissioner Jorge Perez said in a statement. "This action underscores the importance of state financial regulators in not only protecting consumers but ensuring the integrity of the financial system as a whole. As these types of financial services continue to become more widespread, the Department stands ready to enforce our laws and ensure that terrorists and other bad actors do not gain access to our financial system."

Regulators in Arkansas, California, Massachusetts, Florida, Maine, Texas, and the state of Washington led the investigation.

According to filings with the U.S. Securities and Exchange Commission, Cash App had 56 million monthly transacting users as of December 2023, with transaction inflows exceeding $248 billion that year. Cash App operates in all 50 states, facilitating financial transactions for a wide user base.

In a separate but related action, the Consumer Financial Protection Bureau (CFPB) has ordered Block to refund up to $120 million to consumers and pay an additional $55 million penalty into the CFPB's victims relief fund due to serious security failures. According to the CFPB, Block employed weak security protocols for Cash App, leaving users vulnerable to fraud. Despite being legally required to investigate unauthorized transactions, Block failed to conduct thorough investigations and often denied claims from users who suffered financial losses.

"Cash App created the conditions for fraud to proliferate on its popular payment platform," CFPB Director Rohit Chopra said. "When things went wrong, Cash App flouted its responsibilities and even burdened local banks with problems that the company caused."

Block's handling of consumer disputes exacerbated the issues, according to documents. Users were often directed to seek transaction reversals through their banks, which Block would subsequently deny. Block also allegedly misled users through its Terms of Service, falsely indicating that banks were responsible for disputes and depriving users of effective customer support. Fraudsters also targeted consumers by posing as Cash App representatives, further victimizing those seeking help.

In November 2024, the Consumer Financial Protection Bureau introduced a rule aimed at expanding its oversight of the largest nonbank companies offering digital payment apps and funds transfer services. The rule specifically targets companies processing more than 50 million transactions annually, ensuring they comply with federal laws similar to banks and credit unions.

As digital payment apps have become essential financial tools, the rule focuses on protecting consumer privacy, preventing fraud, and addressing issues like debanking.

The CFPB's goal is to safeguard consumers from data misuse, incorrect transactions, and unexpected account closures. Additionally, the rule gives the CFPB the authority to proactively examine these companies to identify and prevent potential harm to consumers.