Block Inc. Settles $12.5 Million CEMA Case Over CashApp Referral Program

What's Happening?

Block Inc. has agreed to a $12.5 million settlement in Washington state over claims related to its CashApp 'refer a friend' program. The settlement addresses allegations under Washington's Commercial Electronic Mail Act (CEMA), which is similar to the Telephone Consumer Protection Act (TCPA) but has broader requirements. The program offered users a monetary incentive to refer friends, which led to the transmission of messages that allegedly violated CEMA. The settlement covers over 1.9 million phone numbers with Washington area codes. Legal fees for the class attorneys are expected to be around $3.1 million, leaving over $8 million for the class members.

Why It's Important?

This settlement highlights the legal risks companies face when operating referral programs that involve electronic communications. Washington's CEMA imposes stricter regulations than the federal TCPA, affecting how businesses can engage in marketing practices. The case underscores the importance of compliance with state-specific laws, which can have significant financial implications. Companies operating in multiple states must be aware of varying legal standards to avoid costly settlements. This development may prompt businesses to reassess their marketing strategies and legal compliance frameworks, particularly in states with stringent consumer protection laws.

What's Next?

Following the settlement, Block Inc. and other companies may need to revise their referral and marketing programs to ensure compliance with state laws like CEMA. Legal experts and businesses will likely monitor the claims rate and distribution of settlement funds to class members. This case may lead to increased scrutiny of similar programs in other states, potentially resulting in more legal actions. Companies might invest in legal consultations to navigate complex state regulations and avoid future litigation. Stakeholders will be watching for any changes in state legislation that could further impact marketing practices.