RushCard, the prepaid debit card company owned by hip-hop mogul Russell Simmons, said yesterday that it would compensate the tens of thousands of customers whose cards were inaccessible during a two-week-long outage. The issue first began on October 12th when the company tried to switch to a payment system with MasterCard and ran into a technical malfunction. RushCard executives say the issue was resolved last week, but some users may still be unable to withdraw cash or use their card to pay bills.
The company previously said it would waive fees, like maintenance and transaction fees and ATM charges, for four months starting in November, but this new compensation effort goes one step further. Simmons said he has been compensating customers out of his own pocket, but that an official RushCard fund is now being set up to reimburse those who suffered losses in the form of late fees and other financial hardships imposed by the malfunction. "This whole situation has been devastating for them, and we want to make sure they are made whole," Simmons said yesterday in an interview with the Associated Press.
"We want to make sure they are made whole."
The ordeal has led to increased scrutiny of the prepaid debit card market. RushCard, founded more than a decade ago, was one of the first companies to provide prepaid debit cards to those without easy access to a bank account. Yet these products operate without the same consumer protections as standard debit and credit cards. Now, the Consumer Financial Protection Bureau, the Federal Trade Commission, and the US Treasury Department are all looking into ways to impose stricter regulations and increase oversight.