Block Inc. (SQ) is the target of a regulatory investigation launched by a coalition of seven U.S. states that is examining the company’s Buy‑Now‑Pay‑Later (BNPL) business model. The probe was announced on December 3, 2025 and focuses on the practices of Block’s Afterpay‑powered BNPL service, which has become a growing revenue source for the company’s Cash App platform.
The BNPL segment has been a key driver of growth for Block. In the first quarter of 2025, Afterpay generated $312.9 million in revenue, up 10.9% from $283.5 million in the same period a year earlier. The segment contributed roughly 10% of Cash App’s gross‑profit growth, underscoring its importance to Block’s overall financial performance.
Investors reacted sharply to the announcement, with Block’s shares falling 6.6% on the trading day following the news. The decline reflected concerns that potential fines, operational restrictions, or mandatory changes to the BNPL offering could disrupt the segment’s momentum and erode earnings growth.
Block’s management issued a statement saying the company is fully cooperating with the investigation and believes its BNPL practices comply with all applicable consumer‑protection laws. The company added that it does not anticipate any immediate impact on its operations or financial results, but it will continue to monitor the situation closely.
The probe highlights a broader trend of increased regulatory scrutiny of fintech‑enabled credit products. While the outcome remains uncertain, the investigation could force Block to invest in compliance resources or adjust its BNPL strategy, potentially affecting the company’s growth trajectory in a market that is already highly competitive.
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