RushCard Customers Cut Off From Their Funds Last Year Will Finally Be Reimbursed
Debit card company RushCard found itself embroiled in a lawsuit after its customers were suddenly unable to access money in their accounts last year. Now, those hundreds of customers can expect to be reimbursed for the financial strain they may have experienced during the outage.
Last week, the company, established by rap mogul Russell Simmons, announced that it would pay $100 to every last one of its 300,000 users who weren’t able to access their funds, no documentation of hardship needed, Think Progress reports. The reimbursements are part of a preliminary settlement over a class-action lawsuit filed against the company. The settlement still requires court approval, however.
According to Think Progress, if a customer is able to prove other losses, he or she may be able to receive up to $500. Those payouts, in addition to other fee reimbursements distributed earlier, add up to a whopping $19 million paid back to RushCard customers. Another 1.5 million will be set aside for attorney fees, per the news site.
“We are pleased to have reached this preliminary settlement, which will resolve the claims of our cardholders,” Rick Savard, the CEO of parent company UniRush, said in a statement. “We believe this settlement fairly compensates our customers who were inconvenienced.”
The prepaid debit card company experienced major technical issues last October when it attempted to transition to another payment processor, the Washington Post reports. As a result, over 132,000 customers were locked out of their accounts. Per Think Progress, card holders were outraged as they fell behind on bills, ran low on on groceries, or even faced eviction.
Katreece Wright told the publication that she and her husband were down to their last $15 dollars after going two weeks without being able to access their account.
“We don’t have gas money, I’m out of meat to feed my children,” Wright said.
The Wright family’s water was scheduled to be turned off due to a missed payment while a late car note payment is likely to affect Katreece’s credit score.
“The company recognized that their service had caused frustration and unhappiness and damages [to cardholders],” said John Yanchunis, the lead attorney representing the plaintiffs in the class-action suit.
Yanchunis said he is also pleased with the results of the settlement and confirmed that customers should begin receiving their checks four to five months after the deal is approved, Think Progress reports.
Although a settlement has been reached, RushCard is still under investigation by the Consumer Financial Protection Bureau (CFPB) due the overwhelming number of complaints it was receiving about prepaid debit cards. According to Think Progress, bureau director Richard Cordray informed the company that it would have to verify what exactly caused the mass outage and compensate the customers affected by it. RushCard attempted to halt the investigation but failed.
The settlement may not stop all financial woes for RushCard holders, however, as pre-paid debit cards are known to be riddled with usage fees. Such cards appeal to families who earn less than $25,000 per year and might not be able to afford opening a bank account. RushCards specifically cost between $3.95 and $9.95 to open and charge fees for various transactions and withdrawals the news site also reports.
Last year, the CFPB proposed new regulations for the pre-paid debit card industry by requiring companies to be upfront and clear about costs and risks, providing customers with free access to account information, and curbing customers’ losses if their cards are lost or stolen.