Consumers Awarded $10 Million by CFPB for RushCard Fiasco
The October 2015 RushCard fiasco, which prevented thousands of consumers from accessing their money, will cost Mastercard and UniRush $13 million in payments and fines.
Today, the Consumer Financial Protection Bureau ordered the two companies to pay $10 million in restitution to the consumers affected by the breakdown. In addition, Mastercard and UniRush will pay $3 million to the CFPB Civil Penalty Fund.
In October 2015, RushCards, the popular line of prepaid debit cards from music entrepreneur Russell Simmons, experienced a technical glitch that left thousands without access to the funds in their accounts. The breakdown of the RushCard line, mostly used by unbanked Americans, took place when the company transitioned to a new payment processor, Mastercard. The fiasco caused many people to be unable to withdraw cash, get their paychecks or pay bills.
The CFPB determined that UniRush delayed processing direct deposits for more than 45,000 consumers, and did not process, or improperly returned, deposits of 2,000 others. Consequently, these consumers could not access their paychecks or government benefits. In addition, UniRush did not accurately transfer all accounts to Mastercard, so thousands of consumers could not access funds stored on their cards for a significant period of time. As a result, accounts of about 1,110 consumers were incorrectly suspended.
“Mastercard and UniRush’s failures cut off tens of thousands of vulnerable consumers from their own money, and threw some into a personal financial crisis,” said CFPB Director Richard Cordray. “The companies must set things right for consumers and make sure such devastating service disruptions are not repeated.”
About Bill Hardekopf
Bill Hardekopf is the CEO of LowCards.com and covers the credit card industry from all perspectives. Bill has been involved with personal finance for over 15 years. He is a frequent contributor to Forbes, The Street and The Christian Science Monitor.