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Russell Simmons’ RushCard Investigated After Money-Access Debacle

“A handful of people” are still affected nearly two weeks after customers first lost access to their money, RushCard’s CEO says

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Customers of Russell Simmons' RushCard have experienced problems accessing their money over the past few weeks.

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The Consumer Financial Protection Bureau is investigating RushCard, a prepaid debit card founded by hip-hop impresario Russell Simmons, and marketed to low-income Americans without regular bank access. Nearly two weeks after hundreds of thousands of RushCard users lost access to their paychecks, government benefits and electronic funds transfers, some cardholders are still experiencing problems with their accounts.

“We have a handful of people left who are still not able to access correct information about their accounts,” RushCard CEO Rick Savard said in a statement Friday. “Their funds are there but their information is still inaccurate. We are working to contact them individually to assist them with their needs.”

The problems started, Savard said in a statement earlier this week, when RushCard switched from an old transaction processor to a new one. “During this process, many of our customers were adversely affected when the technology that was used to transition their accounts did not work as planned.”

Savard went on to say RushCard had “set up command centers in NYC and Cincinnati to begin outreach to those who remain affected.”

Those “command centers” are RushCard’s existing offices in New York and Ohio, where additional staff have been made available to address the influx of customer complaints, Jake Oliver, a spokesperson for Simmons and RushCard tells Rolling Stone.

Oliver could not specify what additional services, if any, staffers will be able to offer RushCard users who have been unable to access their funds.

(Both Simmons and Savard declined to speak to Rolling Stone for this story, via Oliver.)

Consumer Financial Protection Bureau Director Richard Cordray said Friday that he has called Savard to tell the CEO that the bureau “is prepared to use all appropriate tools at our disposal to help ensure that consumers obtain the relief that they deserve.”

The CFPB, Cordray said in a statement, was already communicating with regulators at 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.”

Russell Simmons has opened up his direct messages on Twitter so any user can DM him. But throughout the week, RushCard users have been tweeting that they’ve DMed Simmons but have not received help.

As a peace offering to cardholders, Savard said RushCard will suspend the fees it usually charges customers between November 1 and February 29, 2016. Those fees are quite steep: In addition to activation and “inactivity” fees, RushCard users incur a $1 fee every time they swipe their debit card (capped at $10 per month).

The fee holiday does not address the cascading fees users started accruing when their funds became unavailable on October 12. The RushCard spokesperson declined to say why the fee holiday would not be retroactive.

On Wednesday, Simmons said in a statement, We are working around the clock to fix the small amount of customers who are still adversely affected from our technology transition that took place last week.”

He attempted to reassure cardholders by noting that RushCard is FDIC insured. But FDIC insurance applies to bank closures, not technological glitches like the one that left hundreds of thousands of RushCard users without access to their money for over a week, an FDIC representative tells Rolling Stone. The representative notes that MetaBank, which backs RushCard, is regulated by the Office of the Comptroller of the Currency. (Customers can file a complaint on the OCC’s website.)

Earlier this week, the CFPB advised RushCard customers who were still affected to think about switching their direct deposits to another account, or requesting paper checks from their employers. “It is outrageous that consumers have not had access to their money for more than a week,” the bureau said in a statement.

The CFPB also advised RushCard holders to request that their late fees be waived, and encouraged users of all prepaid cards to keep an eye on their accounts and report any problems to the card issuer. (Formal complaints can be lodged on the CFPB website, or by phone at 855-411-2372.) 

On Friday, RushCard’s CEO promised the company will be doing more to make amends with customers. “Very soon RushCard will be making a significant announcement on how we plan to make this right with our customers who were severely inconvenienced and in some cases suffered hardships,” Savard said.

In This Article: Russell Simmons

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