The Many Ways Cash App Can Take Your Money

Cash App, along with other peer to peer funds transferring apps, is an extremely popular, convenient, but unregulated way to manage money. Many people use it as a relatively “frictionless” method to pay for goods and services when those services do not take traditional credit cards or debit cards and when cash is not an option. Cash App was created initially as Square Cash by the Square Corporation, now known as Block Incorporated. It claims something around 51 million monthly transaction active users, making it one of the largest ways to send and receive money by peer to peer cash money transferring apps. Each user creates a $cashtag, which is like the address to which you send and receive money. The cashtag acts like a bank account number. You open an account by providing a phone number and may link your bank account, credit card, or some other funding source.

However, there have been a number of problems reported by users of cash app. The first, and easiest to explain, are run of the mill data breaches. As with any web-based application, you have to trust the security of the application, the software that underlays the application, and the integrity of the employees of the company that runs the service. In Block’s case, a former employee with access to customer information in December of 2021 downloaded the personal information of 8.2 million former and current customers of Cash App. This made possible identity theft and other scams.

There has been a great deal of fraud that is perpetrated through Cash App. Things like scammers calling and impersonating Cash App customer service requesting the pin of the user. This gave those scammers access to the Cash App account of individuals such that they could clear out both the Cash App balance, but also the underlying linked bank accounts. Scammers have also been able to use the lack of compliance standards of Cash App to create misleading user names and cash tags. User names like Donald Trump, Jack Dorsey (founder of Block Incorporated), and Elon Musk proliferate on the platform. Their corresponding cash tags are suggestive that they are tied to each of these individuals. Scammers use these cash tags and user names in order to gull unsuspecting users into believing that they are going to receive money from these famous individuals. In the alternative, scammers can use these famous names and cash tags in order to solicit donations for political campaigns and things of that nature that do not exist. Because Cash App does not have buyer insurance, if you spend money through the platform for goods and services that are not then provided, there is no good way for you to recover your money. Cash App’s willingness to refund money stolen through fraud and by other means has been spotty at best. This has led to Class Action Lawsuits in the past. Further scamming is made all the easier by Cash App’s policy of banning only accounts and not individuals. Scammers, when they are caught, can simply switch accounts.

Another mode of fraud is simply identity theft. Cash App did not require full social security numbers in order to issue prepaid debit cards despite being required to by law until 2023. Their compliance department only required the last four digits for individuals requesting a prepaid debit card. This allowed scammers who had gotten hold of those last four digits to apply for and use prepaid debit cards in the names of various individuals without those individuals knowledge. These prepaid debit cards could often be linked to other bank accounts or fraudulent credit cards.

Most disturbing, Cash App has become a haven for facilitating illegal transactions. Drug traffickers often use cash app to facilitate their drug transactions. Drug trafficking, being a dangerous and violent occupation, has often led to payments for more violent crimes, things like murders for hire, payments for hush money, and other unsavory activities. It is also been cited in a number of federal indictments as the payment system of choice for sex trafficking. As a frictionless payment platform, it does not allow for the massive regulation that has sprung up to combat money laundering and other criminal activity. Cash App appears to be aware that it is used in facilitating illegal transactions. While they have thus far not been held accountable for their profiting off of these kinds of transactions, we believe that they are liable for damages in certain circumstances. Their business model is designed at to profit from these illicit transactions.

If you have been injured by Cash App’s lack of compliance with various regulations, or you feel that Cash App has facilitated some transaction that led you to be injured, please give us a call at (864) 582-5118.

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