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US CFPB Fines Cash App-Parent Block Over Insufficient Fraud Protection

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The U.S. Consumer Financial Protection Bureau (CFPB) has imposed a penalty on Block, the parent company of the popular mobile payment service Cash App, over allegations of inadequate fraud protection measures. According to the CFPB, Block directed Cash App users who experienced fraud-related losses to contact their banks for transaction reversals, but these claims were subsequently denied. The regulator further accused Block of using various tactics to prevent users from seeking help, ultimately reducing the company’s own costs.

Cash App, one of the largest peer-to-peer payment platforms in the U.S., allows users to send and receive money, accept direct deposits, and make purchases using a prepaid card. CFPB Director Rohit Chopra criticized Cash App for failing to fulfill its responsibilities, burdening local banks with problems caused by the company’s actions.

Block, led by Twitter co-founder Jack Dorsey, responded by stating that the issues cited were historical and no longer reflect the current Cash App experience. The company emphasized that it disagreed with the CFPB’s characterizations but chose to settle the matter to move forward and prioritize its customers and business.

The enforcement order includes a $55 million penalty to be paid into the CFPB’s victim relief fund, along with up to $120 million in compensation. Block has also been required to establish a 24-hour live customer service for investigating unauthorized transactions and issuing refunds.

Additionally, the company agreed to pay $80 million to settle with 48 state financial regulators. This penalty comes amid other actions taken by the CFPB against financial services, including a lawsuit against Zelle and major banks last month.

 

US Appeals Court Blocks Biden Administration Effort to Restore Net-Neutrality Rules

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A U.S. appeals court ruled on Thursday that the Federal Communications Commission (FCC) did not have the legal authority to reinstate net neutrality rules. This decision is a setback for the Biden administration, which had made restoring the open internet rules a priority. In 2021, President Joe Biden signed an executive order urging the FCC to reinstate the rules, which were originally implemented in 2015 under President Barack Obama, then repealed by President Donald Trump’s FCC in 2017.

The ruling by a three-judge panel from the 6th U.S. Circuit Court of Appeals, based in Cincinnati, stated that the FCC lacked the authority to reinstate the net neutrality rules. These rules require internet service providers (ISPs) to treat internet data and users equally, prohibiting them from slowing speeds, restricting access, or blocking content. The rules also prevent ISPs from offering improved speeds or access to favored users.

The court’s decision cited the Supreme Court’s June ruling in the Loper Bright case, which overturned a 1984 precedent that had previously granted deference to government agencies in interpreting laws. This decision curtails the power of federal agencies, including the FCC. The ruling keeps state-level neutrality rules, such as those in California, in place but may effectively end over 20 years of efforts to provide federal oversight over the internet.

FCC Chair Jessica Rosenworcel called for Congress to act, emphasizing that consumers have expressed the desire for a fast, open, and fair internet. “With this decision, it is clear that Congress needs to take up the charge for net neutrality and put open internet principles into federal law,” Rosenworcel said.

Incoming FCC Chair Brendan Carr, who had voted against reinstating the rules, celebrated the court’s decision, criticizing the Biden administration’s attempts to expand regulatory control over the internet. Industry groups, including USTelecom, which represents major ISPs like AT&T and Verizon, applauded the ruling, claiming it would benefit consumers by fostering more investment, innovation, and competition in the digital marketplace.

Apple Faces £3bn Lawsuit Over Alleged Anti-Competitive iCloud Practices

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Consumer group Which? has filed a legal claim against Apple, alleging that the tech giant has unfairly restricted around 40 million British users to its iCloud storage service and charged them “rip off prices” for additional storage. If successful, the claim could lead to a £3 billion payout, with individual customers receiving approximately £70.

Which? claims Apple has “locked” users into its service and overcharged them for storage, offering minimal free storage space and pushing users toward paid iCloud plans. Subscription costs range from £0.99 per month for 50GB to £54.99 per month for 12TB of space. Apple counters these claims, asserting that users are not required to use iCloud and can turn to third-party storage options. Apple also states that it prioritizes user security and aims to make data transfer accessible.

Toby Starr from Humphries Kerstetter commented that this case is part of a “growing tide” of legal actions against tech giants, including Facebook, Google, and Steam, brought before the UK’s Competition Appeal Tribunal. Starr believes that such cases, although lengthy, are likely to impact big tech as they may end in settlements.

Anabel Hoult, CEO of Which?, stated that the lawsuit serves as a message to large corporations, emphasizing that UK consumers should not be exploited. Which? seeks not only compensation for affected customers but also aims to discourage similar behavior from large tech firms in the future.

Which? has partnered with law firm Willkie Farr & Gallagher, with funding from Litigation Capital Management. Alan Davis of Pinsent Masons suggests that further similar claims could emerge, driven by the high value of potential damages and the support of litigation funders. However, he points out that without a competition law infringement decision, the burden of proving market abuse rests on the claimant.

Which? has urged Apple to settle the issue without prolonged litigation, advocating for refunds to consumers and greater market competition.