If you regularly use your Cash App account to pay friends or cover expenses, you certainly aren’t alone. The platform has tens of millions of monthly active users who are each well-accustomed to the app’s easy-to-use interface and sleek design. However, despite its widespread use and appeal, Cash App has also garnered some negative attention with rumors of fraudulent withdrawals and unauthorized access coming to light.
These legal claims have since spurred a Cash App settlement lawsuit to help users recoup their out-of-pocket losses. If you have one or more Cash App accounts, you might be able to file a claim. Here’s everything you need to know about the landmark settlement involving the popular payment app.
Cash App 101
Block, Inc., formerly known as Square, Inc., has a foothold in the peer-to-peer payment (P2P) market and a similarly strong presence in the business-to-consumer (B2C) payments space. One of the company’s biggest successes to date is Cash App, which initially launched in late 2013. Back then, it was first known as “Square Cash,” but the Cash App moniker proved to be far snappier and more memorable.
In any case, the first few years of Cash App’s existence were more than a bit rocky; in 2015, Block was outright losing money any time a user withdrew funds. Thankfully, developers started to make the app financially viable in 2016 by adding the ability to maintain a balance. By 2017, Block was making about $15 per revenue per customer, a figure that has continued to rise since.
Cash App reported 55 million monthly users in 2023. Of those, about 40% had a Cash Card, a debit card designed for those who may not want to use their phone to conduct transactions. The surge in users between 2017 to 2023 led to a major uptick in revenue and profits. Cash App and Block, Inc. reported $14.3 billion in revenue for 2023 and a gross profit of $4.32 billion.
The Data Breaches and Security Issues
The Cash App class action settlement can be linked to a pair of data breaches, one of which occurred in 2021 and the other in 2023. The first incident involved a former Cash App Investing employee gaining unauthorized access to the user data of multiple Cash App accounts, including names, account numbers, and potentially sensitive financial details.
While the incident occurred in 2021, the company didn’t disclose the breach until April 2022, a delay that exposed Cash App customers to additional risks because they didn’t know that their data was potentially compromised.
Unfortunately, the 2021 breach wasn’t an isolated event. The 2023 incident involved a Cash App user accessing recycled phone numbers that were still linked to various accounts. The individual then used these numbers to make unauthorized withdrawals and steal sensitive data.
These breaches have highlighted weaknesses in Cash App’s security framework and prompted scrutiny over how well the platform protects its users’ information. Claimants in the settlement case have also raised complaints about the company’s error resolution process and inadequate response to claims of fraud.
The Class Action Lawsuit
Consumers filed a class action lawsuit against Cash App and its parent company, Block, in 2022, alleging that Cash App had failed to implement proper security protocols to protect its users’ data, leading to unauthorized access and subsequent fraudulent activities. Plaintiffs have also claimed that the company’s delayed disclosure of the breaches compounded the damage, as users were left vulnerable for months without knowing of the risks.
Despite these accusations, Block pushed back, initially denying any wrongdoing and maintaining that it had followed established data security best practices, all in hopes of having the case dismissed. Such is a common tactic among major corporations, given that delaying a settlement can sometimes lead to more favorable terms for the business.
Nevertheless, as the case progressed, plaintiffs made a strong case for having their claims covered and receiving credit monitoring courtesy of Cash App, leading Block to ultimately reach a $15 million cash settlement.
Below is a closer look at the details of that settlement:
Details of Cash App’s $15 Million Settlement
Cash App’s settlement agreement allocated $15 million to a fund meant to compensate users who were affected by the app’s breaches and Block’s poor resolution practices. These funds will be used to cover attorneys’ fees and pay plaintiffs.
The case covers all Cash App users who had a linked financial account between the dates of August 23, 2018, and August 20, 2024. If you did, and any of the following criteria are met, you are eligible to partake in the settlement:
- Your account or personal information was obtained or accessed without your authorization
- Unauthorized or fraudulent withdrawals or transfers were made to or from your account
- Cash App was deficient in its resolution response when addressing claims of fraud or error
The majority of the settlement’s funds will be allocated to cover out-of-pocket losses for class members. If you meet the class criteria, you can submit eligible claims for any such losses that occurred during the claim period.
You can submit a claim form for up to $2,500; however, you must provide third-party documentation that shows the incident was linked to an Unauthorized Account Event, a Data Security Incident, or a deficiency in error resolution. Additionally, eligible class members may also submit claims for reimbursement for any documented transaction losses arising out of an Unauthorized Account Event.
How to File a Claim
Filing a claim is relatively simple. Simply visit the settlement website and fill out the online form. Make sure you provide all necessary documentation to support your claim, such as third-party evidence that shows your loss was linked to a qualifying incident.
You must submit your claim by November 18, 2024. If you don’t file by then, you will not be eligible to receive compensation, even if you meet all other criteria.
After the claim period closes, a final approval hearing will take place. The hearing for the Cash App case is scheduled for December 16, 2024. If the court issues a final approval, the fund manager will begin issuing payments to eligible class members who submitted claims by the November deadline.
Potential Compensation
As mentioned, the maximum reimbursement for out-of-pocket losses is $2,500, and you must provide third-party documentation to support your request. These files must outline how much you lost and how the incident was related to a qualifying incident or unauthorized access event.
You can also file a claim of compensation for lost time. These types of claims are related to allegations that Cash App’s resolutions team performed inadequately. Let’s say you spent many hours dealing with the support team and waiting on hold, but your complaint was not adequately resolved. You could file a claim for lost time of up to three hours on these grounds. Claims are calculated at a rate of $25 per hour, thus making a maximum claim for three hours’ time worth $75.
If claims exceed the settlement funds, payments will be distributed on a pro-rata basis. That means users will receive a percentage of the settlement based on the total amount of claims filed and the amount of compensation they are approved for.
Other Options for Class Members
There are three other ways to respond to the incident aside from filing a claim. First, you can choose to opt out of the settlement, which allows you to pursue separate legal action against Cash App or Block. However, by choosing to do so, you won’t be eligible for compensation from the class action case, and pursuing your separate legal action against a large corporation like Block won’t be cheap.
If you disagree with the terms of the settlement but don’t want to completely opt out, you can file an objection. You’ll remain part of the class, but you’ll be formally stating your opposition to the settlement’s terms.
Lastly, as simple as it sounds, you can choose not to do anything at all. Of course, making such a decision means you won’t receive any compensation, and you’ll waive your right to file any future claims related to the case at hand as well.
Impact on Cash App and the Mobile Payment Industry
While the company has not admitted to any wrongdoing, the legal action Cash App has found itself mixed up in has pushed those in charge to implement some changes to its security measures, such as stronger safeguards to protect user data. These changes will likely include better encryption and stricter access controls.
The entire P2P payment industry will likely apply lessons gleaned from the Cash App settlement, too, which means that apps like Venmo, Zelle, and PayPal are each likely to make changes to their cybersecurity practices and data breach response plans as well.
Implications for Users
If you’ve been using Cash App and intend to continue doing so, it’s important to take extra precautions to protect yourself. Here are a few strategies to reduce your risk of unauthorized access and fraud:
- Use Strong Passwords: Create a strong combination of upper and lower case letters, numbers, and symbols
- Enable Two-Factor Authentication: Add an extra layer of security by providing a second form of verification in addition to your password
- Monitor Your Accounts Regularly: Look out for anything unusual like transactions you don’t recognize
You can apply these tips to other P2P payment apps and any other account that includes sensitive personal information. While apps like Cash App are supposed to make your life more convenient, you don’t want to sacrifice security for ease of use.
Cash App’s Problems Are Nothing New in the Tech Sector
Cash App is certainly not the only financial tech (fintech) company that has faced legal action. Capital One, for instance, was the subject of a 2019 class action lawsuit that was the result of a far-reaching data breach. Consumers hit the financial services giant with another class action suit in 2023 after discovering unfair and questionable overdraft fees being charged to their accounts.
Verizon is another great example of what can happen when a company fails to adequately respond to a data breach. Verizon is not a fintech company, to be fair, but it deals with a ton of sensitive data. And a group of more than 63,000 employees sued the company after discovering that an internal breach exposed their sensitive information. Making matters worse is that the carrier waited roughly three months to notify its workers.
What the Cash App Case Means for You
Cash App’s $15 million settlement is a wake-up call for both the company and consumers like you. Stay vigilant and take steps to protect your financial information. While Cash App and other mobile payment platforms will likely improve their security measures, it’s up to you to keep your money and data out of the wrong hands. A little proactivity goes a long way.