Filing: the US FTC is probing Block over inadequate customer service for frozen or deactivated Square accounts amid staffing cuts, following 1,500+ complaints

If your Square or Cash App account is frozen, you may experience longer delays in resolution.

The U.S. Federal Trade Commission (FTC) is investigating Block Inc., the parent company of Square and Cash App, for alleged failures in customer service related to frozen or deactivated accounts. Court filings revealed the FTC's probe, initiated last year, seeks documents to determine if Block violated consumer protection laws. Consumers have reported issues since 2022, with accounts frozen or deactivated, preventing access to funds totaling up to $2.5 million. The FTC claims Block did not provide adequate assistance, even to verified customers. This investigation comes amid Block's significant staffing cuts, which the company attributed to an embrace of AI, a move questioned by critics who suggested it could be "AI washing" to mask poor business performance. Block has stated it is cooperating with the FTC and committed to resolving the matter.

The FTC's investigation into Block's customer service for frozen accounts highlights a growing regulatory focus on consumer protection in the fintech sector, especially concerning account access and fund availability. This probe could set a precedent for how financial technology companies handle customer disputes and account issues, potentially leading to stricter oversight and compliance requirements across the industry. The agency's emphasis on "meaningful assistance" suggests a move towards ensuring that even automated or AI-driven processes include robust human support for complex customer problems.

Block's situation underscores the potential risks of aggressive AI adoption and workforce reduction, particularly when coupled with customer-facing issues. While Block touts AI as a productivity enhancer, the FTC's scrutiny raises questions about whether cost-cutting measures have impacted the company's ability to adequately serve its user base. This could signal a cautious approach for other fintechs looking to scale using AI, as they will need to demonstrate that technological advancements do not come at the expense of essential customer support and regulatory compliance.