Wednesday, October 5, 2022

Russell Simmons’ RushCard Brings Financial Issues For Customers


*As Russell Simmons tries to smooth things over with upset RushCard customers who can’t get to their money, this apparently isn’t the only thing the card has going against it.

According to the Los Angeles Times, the  customers have put the company on blast on social media while confessing that they’ve spent a week or longer without access to their money. They add that trying to reach someone in customer services has been difficult or impossible.

Responding to the situation, Simmons took to his Facebook page on Wednesday (Oct. 21) to reveal that his company has been “working 24/7” to restore full service to the RushCards and that most of them should be working normally now.

russell simmons statement on RushCard situationThe current situation comes more than a decade after Simmons introduced the RushCard in 2003. The Times notes that RushCard customers can use the card as a conventional debit card” at stores or ATM’s to get at money they deposit or have direct deposited by their employers.

Despite this, the reality is that the customers often live paycheck to paycheck and may not have the resources to tide them over when their RushCard accounts are inaccessible or blocked.

Referencing the FDIC, the Times mentioned that the “unbanked” or “underbanked” customers served by RushCard comprise “as many as 68 million adults, or up to one-third of U.S. households,” with a large part of them being black or Hispanic.

“Without access to conventional bank accounts, whether because they don’t have reliable income or spare resources to maintain an account balance, they have to resort to high-fee debit cards as an alternative to cash and even for (very high-priced) credit,” the publication reports, adding that the RushCard is the latest in a string of celebrity-endorsed prepaid debit cards.

Those lending their name and clout to the cause in unsuccessful ventures include personal finance guru Suze Orman, rapper Lil Wayne, Justin Bieber, Magic Johnson and the Kardashian family, who bailed out less than month after coming out with their Kardashian Kard.

“These cards often are issued by small banks headquartered in states with indulgent banking regulations, which they can apply to customers nationwide,” according to The Times, which revealed that Simmons’ RushCard was backed by MetaBank. “Like many other such cards, Simmons’ RushCard comes barnacled with fees (though some have been reduced since the card’s introduction): up to $9.95 to acquire the card in the first place, a monthly account fee of up to $7.95, $1 for every transaction, a $1.95 “maintenance fee” for months without transactions. For holders of legitimate bank accounts, such fees are typically zero,” the publication added.

“Unlike other prepaid debit cards, the RushCard does offer some bank-like benefits, including the ability to pay bills. But its benefits can be oversold. Among its come-ons is that direct-deposit customers can get their money “up to two days sooner.” That might have sounded like a two-day advance on their paycheck, but the fine print — and it’s really fine print — reveals that this is two days sooner compared with the hold other banks might put on paper check deposits; is available only if the depositing employer notifies RushCard the deposit is coming; might not happen anyway; and the amount might be limited.”

The Times’ story follows regulations proposed by the Consumer Financial Protection Bureau last November for the prepaid debit card industry, which vehemently opposed by the regulations.

Most recently, 43 House Republicans sent a letter to CFPB director Richard Cordray urging him to be more tolerant of the industry, in September.

“Prepaid cards provide a broad array of customers … with revolutionary ways to access, spend, and manage their money,” they wrote.

“RushCard brags about being ranked excellent by Consumers Union for “fee accessibility and clarity, convenience and safety for its customers” the Times acknowledged. “What is doesn’t mention is that CU also ranked it “poor” or “fair” in “value.”

For more on the RushCard situation, click here.




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