RushCard to Compensate PrePaid Debit Card Users for Outage
On October 29, RushCard announced it is creating a “multi-million dollar” fund to cover the costs that its prepaid debit card customers incurred after their cards stopped working in mid-October.
When RushCard moved to a new payment processor on October 12, technical problems ensued that left hundreds of thousands of RushCard customers unable to access their funds. Some users lost access to their money for as long as two weeks.
Since many RushCard customers are low-income Americans who don’t have traditional bank accounts, not being able to access their money meant that they had trouble buying food, paying bills or filling up with gas to go to work.
On October 26, the company posted on its Facebook page that “We can announce today that all major functionality, including 2 day advance direct deposits and card-to-card transfers, is restored.” However, many left comments that they still did not have service and that they were having trouble reaching customer service.
This situation has led many regulators to to scrutinize the prepaid debit card market, as these products do not have the same consumer protections as standard debit and credit cards.
The Consumer Financial Protection Bureau (CFPB) stated on their website, “The CFPB is taking direct action to get to the bottom of this situation that may have harmed thousands of innocent consumers already” and went on to state that it is working with “fellow regulators, including the Office of the Comptroller of the Currency and the Federal Trade Commission, to ensure a comprehensive response that addresses the situation quickly and holds accountable all of the parties involved to make consumers whole.”
RushCard is now promising to compensate any customer who can show they suffered a financial setback, such as incurring late fees or losing an apartment deposit.
Russell Simmons, the hip-hop mogul who backs the company, told the Associated Press that, “This whole situation has been devastating for [customers], and we want to make sure they are made whole.”
While Simmons said he has been personally compensating RushCard users, a fund has been created to make the process more formal. RushCard, MasterCard (the payment processor) and MetaBank (the custodian bank for the users’ money) will contribute to a fund. Some estimate the size of the fund could be in the tens of millions of dollars.
No timetable has been established on when the fund will be started, and RushCard has not announced what criteria or documentation customers will need to provide in order to be compensated.