Hip-hop mogul Russell Simmons of Run DMC founded RushCard, a cash advance card that lets people get their paycheck two days early. RushCard takes a customer’s paycheck, charges them a fee and pays them two days in advance of their paycheck.
Thousands of people woke up to discover that their RushCard accounts were frozen, leaving them without access to their money. Many were without their money more than one week later. The company issued an explanation on their website that they were trying to get the system back up after a technical malfunction while it transitioned to its new payment system with MasterCard.
Users of the service are often financially vulnerable, living from paycheck to paycheck. They rely on this type of service to get them through the week. According to users, people are locked out of their accounts, missing money and can’t get through to anyone at RushCard’s customer service hotline for an explanation.
Reviews started pouring into the Consumer Affairs website with complaints and frustration that they couldn’t feed their children or their gas and electricity were cut off.
The Consumer Financial Protection Bureau has decided to investigate RushCard and issued the following statement on their Facebook page:
“It is outrageous that consumers have not had access to their money for more than a week. We are looking into this very troubling issue. Consumers increasingly are relying on prepaid products to keep their funds, make purchases, and manage their money. Customers who are still affected by this situation should consider stopping their direct deposit, so that they can get their next paycheck by check or have it deposited in another account. Consumers can also ask anyone who has charged them a late fee on a payment affected by this delay to waive that fee. More generally, all consumers using prepaid cards should watch the transactions on their accounts, and report any problem promptly to the prepaid card issuer. The Bureau accepts consumer complaints at or by phone toll-free at 855-411-2372.”
In the meantime, Simmons has been tweeting RushCard customers assuring them he will fix it:
Still working through all @RushCard issues. Will not stop until every account is working properly.
And just as the end of the month approaches and millions of subscribers need access to their money to pay rent and other bills, Simmons has announced that he’s creating a “multi-million dollar” fund to compensate customers who were locked out of their accounts by the technical issues the company underwent.
Simmons spoke with the Associated Press (AP) and assured them that he and RushCard will make sure that every customer facing financial hardship from RushCard’s technical problems receives the help they need. “This whole situation has been devastating for them, and we want to make sure they are made whole,” he said.
He also told AP that the the multi-million dollar fund set up to help the affected customers comes from his own pocket.