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Block: Inflated user metrics and “frictionless” fraud facilitation

hindenburgresearch.com

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Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#61

Post by melling »

overthrow wrote: post #24

I didn't know Square had changed their name to Block. Looks like it happened in December 2021: https://investors.block.xyz/news/news-details/2021/Square-In... That said this really seems overblown. The report seems to mostly just talk about Cash App. Square Payments, Weebly and TIDAL are not even mentioned. Afterpay is mentioned but that was a 2022 acquisition so the problems likely predate Block's involvement. It fe…

What feels weird that the top comment is by someone who didn’t even know the company changed its name 2 years ago.

Can we do better? HN could be so much better.

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#62

Post by likecarter »

johngladtj wrote: post #54
likecarter wrote: post #44

Earlier quoted context omitted.

It just ruins their reputation as a reliable short-seller. It's short-sighted. They had good reports until now.

How does it ruin their reputation as short sellers?

Putting out a low-quality report?

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#63

Post by hef19898 »

jevgeni wrote: post #47
brightball wrote: post #16

Wow... > “Every Criminal Has A Square Cash App Account” – Former Employee > The Signs Are Hard To Miss: There Is Even A Gang Named After Cash App, With Members Arrested For Fentanyl Distribution > Our research shows that Block has embraced a traditionally very underbanked segment of the population: criminals. > Many of These Songs Describe The Role of Cash App in Facilitating Criminal Activity, Including Murder-For-H…

It's essentially a bank without capital requirements and that does not do KYC checks.

What could possibly go wrong with that?

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#64

Post by fallingknife »

nluken wrote: post #38
noloblo wrote: post #14

Earlier quoted context omitted.

> Just about all of silicon valley seems to have run the longest and broadest grift we've seen. What do you mean by this

The “innovations” of many (but not all) post-2008 unicorns are more about creating a legal grey area to bypass regulation than they are actual technological advances. Uber and Airbnb are prime examples. If Uber was forced to used licensed cab drivers or Airbnb forced to use licensed hotels, you would see the breadth of what these companies actually bring to the table, which isn’t nearly as much as their valuations wo…

Yes, if Uber was forced to use the government cab cartel, then it wouldn't be better than the taxis. The entire point is they made taxis that actually work by getting around the taxi cartel.

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#65

Post by jstx1 »

hoofhearted wrote: post #50
numlocked wrote: post #23

"CEO Jack Dorsey has publicly touted how Cash App is mentioned in hundreds of hip hop songs as evidence of its mainstream appeal. A review of those songs show that the artists are not generally rapping about Cash App’s smooth user interface—many describe using it to scam, traffic drugs or even pay for murder." Hindenburg made a music video compiling the references that is...uh...worth watching: https://www.youtube.co…

Correct. A scam here in Baltimore that keeps occurring is that the squeege kids will run up on someone unsuspecting and start cleaning their windshield. They will pressure the driver for a tip, and the driver will say they don’t have cash of course. They will say that’s cool, you can send me a tip. They ask the driver for their phone so they can look up their cashapp for them, and bam the driver got scammed. What’s h…

I don't think you have anyone to blame if you give your phone with a logged in money app to a stranger who is begging for money.

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#66

Post by qclibre22 »

hoofhearted wrote: post #50
numlocked wrote: post #23

"CEO Jack Dorsey has publicly touted how Cash App is mentioned in hundreds of hip hop songs as evidence of its mainstream appeal. A review of those songs show that the artists are not generally rapping about Cash App’s smooth user interface—many describe using it to scam, traffic drugs or even pay for murder." Hindenburg made a music video compiling the references that is...uh...worth watching: https://www.youtube.co…

Correct. A scam here in Baltimore that keeps occurring is that the squeege kids will run up on someone unsuspecting and start cleaning their windshield. They will pressure the driver for a tip, and the driver will say they don’t have cash of course. They will say that’s cool, you can send me a tip. They ask the driver for their phone so they can look up their cashapp for them, and bam the driver got scammed. What’s h…

Banks siding with Silicon Valley firms and not the bank customer is common. Try blocking a vendor that tricked you into signing up. Bank won't help.

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#67

Post by rossdavidh »

While this doesn't look great, it doesn't really seem up to the standards of past Hindenburg reports. Block's main product is credit card processing and point-of-sales, for retailers, and they have a reputation for being the easiest to use and deal with.

I could easily believe that they are not doing their KYC work and that the feds will soon make them do so, but it doesn't really seem to add up to the company being a "fraud".

Which, to be fair, the Hindenburg headline doesn't say, it's "Block: How Inflated User Metrics and “Frictionless” Fraud Facilitation Enabled Insiders To Cash Out Over $1 Billion". Facilitating fraud (by not doing enough KYC, etc.) rather than the company being a fraud.

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#68

Post by bfeynman »

hoofhearted wrote: post #50
numlocked wrote: post #23

"CEO Jack Dorsey has publicly touted how Cash App is mentioned in hundreds of hip hop songs as evidence of its mainstream appeal. A review of those songs show that the artists are not generally rapping about Cash App’s smooth user interface—many describe using it to scam, traffic drugs or even pay for murder." Hindenburg made a music video compiling the references that is...uh...worth watching: https://www.youtube.co…

Correct. A scam here in Baltimore that keeps occurring is that the squeege kids will run up on someone unsuspecting and start cleaning their windshield. They will pressure the driver for a tip, and the driver will say they don’t have cash of course. They will say that’s cool, you can send me a tip. They ask the driver for their phone so they can look up their cashapp for them, and bam the driver got scammed. What’s h…

That is entirely on you if you give away your phone to those kids. I would think they would just run away with it

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#69

Post by ChrisMarshallNY »

stuartjohnson12 wrote: post #3

Chesterton's Fence strikes again - every so often, someone has the bright idea of uninventing all the rules for just long enough that all of the reasons the rules were invented in the first place can regress back into existence.

I sometimes think that the absence of experience is an issue.

Many of these Jurassic-scale disasters are ones that make me wonder "Were there any adults in the room, when this decision was made?"

I suspect the answer is frequently "No."

Re: Block: Inflated user metrics and “frictionless” fraud facilitation

#70

Post by tiny_ta »

> One former customer service employee estimated that 60%-70% of the accounts they reviewed during a typical shift would have more than a dozen linked accounts. Another two former employees estimated 40% and 75%, respectively.

I don't think this necessarily means that 40%-75% of the accounts on Block's books were fake (as I took it to first mean from the summary). Could it just mean that the accounts that were set up for review based on high risk activity were predominantly fraudulent (as they should be)?

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