Keith Mack
Cash App, a payment app with millions of users, has been under scrutiny by federal regulators for allegedly allowing money laundering and terrorist activities. The app's lack of effective procedures to verify user identities has raised concerns among whistleblowers and law enforcement agencies. While Cash App claims to collaborate with law enforcement to prevent illegal activities, the extent to which law enforcement can track and access user data on the app is unclear and may depend on various factors, including legal requirements, user consent, and the nature of the investigation.
| Characteristics | Values |
|---|---|
| Data Collection | Cash App collects user data to verify identity, secure data, fight fraud, follow the law, enforce agreements, and market products. |
| Data Retention | Cash App retains user data to fight fraud, collect fees, resolve disputes, follow the law, and defend legal rights. |
| Data Disclosure | Cash App discloses data to comply with laws, respond to government requests, protect rights and property, investigate illegal activity, and prevent harm. |
| User Age Restrictions | Cash App is not intended for children under 13. Data from users under 13 will be deleted. |
| Prohibited Activities | Cash App prohibits illegal activities such as fraud, bullying, unfair business practices, criminal activities, and specific activities in sanctioned regions. |
| Law Enforcement Collaboration | Cash App partners with law enforcement to disrupt illegal activities and investigate complaints. |
| Identity Verification | Whistleblowers claim Cash App lacks effective procedures to verify user identities. |
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What You'll Learn
Cash App's privacy policy
Cash App collects, uses, discloses, transfers, stores, retains, or otherwise processes user information when users download the app, sign up for an account, and use other services through the app or online. This information is used to ensure the products are working, help users log in, verify identities, secure data, fight fraud, follow the law, enforce agreements, develop new products, and market and tailor products to users. Cash App may collect, use, and share information about users for various reasons, including processing payments, providing products and features, displaying transaction information, and measuring and analyzing trends and usage.
Cash App also uses analytics providers to help analyze how users interact with their online services. These providers use cookies, web beacons, and web server logs to track site-use information, including IP addresses. This information is shared with service providers to understand how users interact with the services. Cash App keeps user information as long as necessary to provide services, comply with legal obligations, and defend legal rights. They may retain information even after account deactivation to comply with laws, prevent fraud, collect fees, resolve disputes, address service problems, and assist with investigations.
Additionally, Cash App may share user information with Square Sellers when using Cash App Local, and with subsequent owners or operators in cases of corporate changes or restructuring. They may also disclose information to comply with laws, enforce terms of service, protect rights and property, investigate illegal activities, and prevent harm to users or the public. Cash App does not knowingly sell or share personal information of children under 16 for cross-context behavioral advertising. They will delete information if they learn it was provided by a child under 13. While Cash App takes measures to secure user data, they cannot guarantee that hackers will not access their sites or steal data.
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Law enforcement access
Cash App, a payment app with 55 million active transacting accounts as of September 2023, has been under scrutiny by federal regulators for allegedly allowing money laundering and terrorist financing. The app has been referenced in hundreds of rap songs, sometimes in connection with illegal activities.
In 2024, two whistleblowers told officials that the app had "no effective procedure" to establish the true identity of customers. They filed their complaint with the Financial Crimes Enforcement Network (FinCEN), a unit of the US Treasury that combats money laundering, terrorist financing, and other illicit activities. FinCEN officials referred the complaint to internal investigators and other federal agencies.
Cash App's privacy notice states that they may collect, use, and share information about users to the extent necessary for processing or recording payment transactions or money transfers, providing the Cash App product and features chosen by the user, displaying historical transaction information, and measuring, tracking, and analyzing trends and usage in connection with the performance of their services. They also state that they will keep user information for as long as necessary to fight fraud, collect fees, resolve disputes, follow the law, and defend their rights in court.
Additionally, Cash App reserves the right to disclose user information if they believe it is reasonably necessary to comply with any applicable law, regulation, legal process, or governmental request, such as those from law enforcement agencies. They also state that they collaborate with their bank partners on controls and monitoring for the activities they are responsible for and partner with law enforcement to help disrupt illegal or illicit activity.
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Criminal use cases
Cash App is one of the largest peer-to-peer payment platforms in the United States, with more than 56 million accounts. It allows users to send and receive electronic money transfers, accept direct deposits, and use a prepaid card to make purchases and ATM withdrawals. The app has been targeted by criminals for various illegal activities, including fraud, money laundering, and scamming.
One of the main criminal use cases of Cash App is fraud. In 2020, during the COVID-19 pandemic, criminals targeted Cash App users who were desperate for quick cash due to the pandemic. They enticed users on social media to send them money for products that didn't exist or as part of a larger scheme to steal their money. Law enforcement officials reported an explosion of fraud cases, with the Secret Service investigating 700 pending investigations related to the Paycheck Protection Program and the Pandemic Unemployment Assistance program. Cash App, along with other popular apps like Venmo, Zelle, and PayPal, were used to launder illegally obtained funds from COVID-19 relief programs, making the transactions more difficult to trace.
Another issue is scamming. Cash App scammers have been able to operate without getting caught by police due to various reasons. One reason is the lack of proper customer support from Cash App. Instead of providing live customer service, Cash App directed users to a pre-recorded message or to contact customer support through the app, resulting in delayed and inadequate responses. This left users vulnerable to fraudsters posing as Cash App representatives, tricking them into giving up their passwords and personal information. Additionally, police resources may be focused on physical crimes like murder, assault, and burglary, rather than scams, especially if the scammers are not residents of the country.
Cash App has also been used for illegal activities such as drug dealing, trafficking in obscene material, and selling narcotics and controlled substances. The app's terms of service prohibit these activities, and the company has implemented measures to fight fraud and detect unusual patterns in payments. However, users have found ways to circumvent these restrictions, and the company has been criticized for its weak security protocols and failure to adequately investigate unauthorized transactions.
To address these criminal use cases, Cash App has been ordered by the Consumer Financial Protection Bureau (CFPB) to pay up to $120 million in refunds and redress to affected consumers and a $55 million penalty. The CFPB has also mandated Cash App to improve its customer service and investigate disputes, including unauthorized transactions, in a timely manner.
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Whistleblower complaints
Cash App has been the subject of scrutiny by federal regulators and whistleblower complaints. The complaints allege that Cash App does not adequately perform due diligence on its customers, leaving the door open for money laundering and terrorist financing. The whistleblowers claim that Cash App has "no effective procedure" to establish the identity of its customers, which is a requirement for banks. This lack of proper user identity verification methods means that Cash App transactions may include dealings with entities under sanction by the Treasury Department's Office of Foreign Assets Control, operations known for selling personal information and credit card data for illegal purposes, and offshore gambling sites prohibited to US citizens.
The whistleblower complaints have been filed with the Financial Crimes Enforcement Network (FinCEN), an agency in the US Treasury Department that combats money laundering and terrorist financing, as well as with the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The lawyer representing the whistleblowers, Ted Siedle, a former SEC enforcement attorney, has stated that regulators are taking the complaints seriously. Siedle also noted that Cash App works with banks, such as Wells Fargo and Sutton Bank of Ohio, to offer its services, but banking authorities are not fully aware of how these partnerships operate.
In response to the allegations, Cash App provided a statement saying that the company performs due diligence on customers, employing "several hundred people" for Know Your Customer (KYC) and anti-money laundering compliance functions. However, the whistleblowers argue that the lack of proper customer due diligence poses risks for shareholders of Cash App's parent company, Block Inc., as well as for Marqeta Inc. and Visa Inc., which are involved in transferring funds for Cash App transactions.
The whistleblower cases filed against Cash App differ in their specific allegations and the laws involved. The SEC case revolves around disclosure violations, the FinCEN case relates to bank compliance violations, and the CFTC case involves bitcoin. As a result of the investigations, the Consumer Financial Protection Bureau (CFPB) may take legal action against Block and Cash App. Block has disclosed that it has received civil investigative demands since 2021 from the CFPB and multiple state attorneys general related to Cash App's handling of customer complaints and disputes.
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Cash App's response
At Cash App, we are committed to ensuring that our platform is a safe space for you and your money. We have a strict Acceptable Use Policy that prohibits any harmful or illegal activity, including fraud, bullying, unfair business practices, criminal or tortious activity, and the sale of narcotics and controlled substances. We also do not allow activities that may violate regulations administered by the United States Department of Treasury's Office of Foreign Asset Control. We take these policies seriously and enforce them to the best of our abilities.
We understand that, as a financial services company, we are not immune to bad actors attempting to use our platform for illicit purposes. As such, we partner with law enforcement to help disrupt illegal or illicit activity. We comply with applicable laws, regulations, and governmental requests to the best of our abilities. This includes sharing information with law enforcement agencies when reasonably necessary to comply with legal obligations, defend our legal rights, or protect our customers' rights and security.
We also have strong measures in place to keep your data safe. We use your data to provide you with our Services, verify your identity, secure your data, fight fraud, and follow the law. We keep your information for as long as is necessary to provide you with our Services, comply with legal obligations, and defend our legal rights. We do our best to protect your data from potential hackers, but no one can ever guarantee that your data will be completely safe from theft.
While we strive to ensure that Cash App is a safe and secure platform, we acknowledge that there may be instances where scammers or illegal activities slip through the cracks. We encourage our users to report any suspicious or fraudulent activities to us and law enforcement, and we will cooperate fully with any investigations. We are always working to improve our security measures and collaborate closely with our bank partners to monitor and control potentially illegal activities.
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Frequently asked questions
Cash App partners with law enforcement to help disrupt illegal or illicit activity. They will disclose user information if they believe it is reasonably necessary for an investigation of suspected or actual illegal activity.
Cash App collects personal information from its users, such as transaction history, account information, and phone numbers. They may also collect information about the user's device and usage of the Cash App services.
Cash App uses the information they collect to provide their services, comply with applicable laws and legal obligations, and protect their users and the public from harm. They may also use the information to market and tailor their products to their users.
