Posted: 2/13/2017

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RushCard is a reloadable prepaid debit card operated by UniRush, LLC and cofounded by entrepreneur Russell Simmons. RushCard is marketed as a way to receive paychecks and benefits up to two days sooner through direct deposit. In October 2015, the company switched their payment processor to MasterCard. Unfortunately for many RushCard customers, the switch caused severe financial hardship for many. The Consumer Financial Protection Bureau (CFPB) has ordered RushCard and MasterCard to pay restitution to these consumers, to the tune of $10 million.

Russell Simmons

RushCard is a reloadable prepaid debit card operated by UniRush, LLC and cofounded by entrepreneur Russell Simmons. RushCard is marketed as a way to receive paychecks and benefits up to two days sooner through direct deposit. In October 2015, the company switched their payment processor to MasterCard. Unfortunately for many RushCard customers, the switch caused severe financial hardship for many. The Consumer Financial Protection Bureau (CFPB) has ordered RushCard and MasterCard to pay restitution to these consumers, to the tune of $10 million.

Problems arose when consumers were unable to access their money, deposits were not made, accounts were wrongly suspended due to suspected fraud, and thousands could not make transactions to take care of their financial obligations. To add insult to injury, customer service failed to effectively assist distressed cardholders. Although extra customer service representatives were hired, they were not adequately trained to help. BCA’s blog on the incident highlighted many of the concerns consumers brought to our attention and blasted across several social media outlets.

While the company later issued public apologies and assurances that matters would be corrected, this did little to comfort many of the consumers harmed by the fiasco. Complaints continue to come in regarding the company’s services and problems experienced by its consumers. RushCard’s failure to respond to complaints, along with a pattern of complaints, has earned them an F rating.

The CFPB announced February 1, 2017, that they entered into a consent order with the entities to pay $13 million in restitution and civil penalties. They will also have to devise a plan to prevent this type of situation from occurring in the future. If a similar incident takes place, the company must ensure an adequate response to the failure, which includes providing sufficient customer service.

Interestingly, Green Dot Corporation announced on January 30, 2017, that it is acquiring UniRush, LLC for $147 million, plus a minimum $4 million annual earn out payment for five years post closing. In relation to the 2015 incident, Green Dot’s press release states, “In the event that there is a regulatory finding and a resulting financial obligation to UniRush, LLC stemming from the 2015 RushCard processing incident, such regulatory resolution and the associated financial obligation will belong to the seller with such obligation expected to be fully resolved prior to closing.”

Affected consumers harmed by the 2015 incident will receive their money directly from the company. The amount each consumer receives will depend on the particular failure they experienced. The order stipulates that at a minimum, the redress provides each affected consumer with the following:

  • $25 to each consumer who experienced a denied transaction during the failure.
  • $150 to each consumer whose card was placed in a possible fraud status that prevented them from transacting or accessing their funds.
  • $100 to each consumer who received incorrect balance information indicating there were no funds in their account.
  • $100 to each consumer whose ACH deposits were not processed in the week after the conversion.
  • $250 to each consumer whose ACH deposit was returned to the funding source, improperly loaded on an expired or inactive card, or was unable to be successfully processed by the company.
  • $150 to each consumer that UniRush offset due to a negative account balance incurred because of rescission of a duplicate ACH deposit or delayed processing of an ACH debit transaction.
  • $150 to each consumer who couldn’t transact or access account funds because the account was not transferred into the payment processing platform or improperly transferred so that it would not allow the card to function properly.
  • $150 to each consumer who couldn’t use their card because a lost or stolen card was not promptly replaced or the replacement card wouldn’t function after the conversion.
  • $150 to each consumer who initiated a cash load that was not promptly posted following the conversion.
  • $50 to each consumer whose card-to-card transfer(s) was not processed immediately following the conversion.

Prepaid accounts are used more and more these days. As a result, new laws have been put in place to protect consumers. Find out about some of these laws by reading BCA’s article, New Protections for Prepaid Account Users.

About Business Consumer Alliance

Business Consumer Alliance (BCA) is a non-profit company that started in 1928. The broad purpose of BCA is to promote business self-regulation. BCA's mission is achieved by assisting consumers in resolving complaints with businesses and using that complaint information, along with other relevant information such as customer reviews, to forecast business reliability. With community support, BCA can identify trustworthy and ethical businesses and warn the public to avoid unscrupulous businesses whose purpose is to defraud the marketplace. BCA also helps businesses promote themselves by providing services and tools to protect their business and reach out to their customers. BCA obtains its funding from member businesses who support the mission and purpose of the organization and who agree to abide by high standards of ethical business practices.

Tags: Rush Card, prepaid debit card, Consumer Financial Protection Bureau, restitution

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