Russell Simmons, RushCard facing federal scrutiny
Company attempting to help customers who took financial hits
Carol Ozemhoya | OW Contributor | 11/5/2015, midnight
Former music mogul Russell Simmons is currently on a mission to get his stellar reputation among African Americans back on track after the RushCard program he backed crashed temporarily last month, causing thousands of customers to have to operate without their money. For some, that meant going without food, being unable to pay rent or even purchase gas for their cars to get to work.
Simmons and the company he partnered with about 12 years ago seem to be working on ways to resolve the issues the break down of its service caused.
According to the Associated Press, RushCard has created a multi-million dollar fund to assist customers who suffered financially, when their accounts were frozen, due to technical difficulties that the company claims happened because of a switch in firms handling the deposits.
Simmons himself has been trying to do damage control by personally answering some account holders on social media and even reimbursing some customers personally for damages, such as late fees, out of his own pocket.
The RushCard is a pre-paid credit card for people—many African American who signed up because of the affiliation of Simmons—who are unable to open bank accounts or get credit cards. The card, however, once a deposit is made, can be used like a credit card. Many users have their paychecks deposited directly onto their RushCard and usually have immediately access to the funds.
However, the card includes a $9.95 monthly service fee, $1.99 for ATM withdrawal, a $1 per transaction cost to pay a bill as well as $1 each time a pin number is used for a purchase.
Facing financial issues
RushCard says it will reimburse users who can show that they were assessed late fees, lost a deposit on an apartment or suffered any similar financial setbacks as a direct result of not being able to access their money through their RushCard accounts.
Although RushCard reported that accounts were back online and available by Friday, some customers claimed they were still unable to access their money at Our Weekly press time.
“This whole situation has been devastating for them, and we want to make sure they are made whole," Simmons said in an exclusive interview with the Associated Press.
RushCard has yet to layout a timetable for this fund and what the requirements will be for customers to get money returned that they lost, as well as be reimbursed for any fees they suffered as a result of their accounts being frozen.
Reportedly, an unannounced third party will set up and operate the fund. RushCard has indicated that government regulators are being consulted to make sure the fund is properly administered.
The fund is expected to be in the tens of millions of dollars to be enough to cover all the complaints.
"We don't have a number yet because it really is whatever it takes to make good with our customers," Simmons said.
RushCard, MasterCard and MetaBank, the custodian bank for the money RushCard users place on their cards, are each expected to contribute to the recovery fund.