RushCard To Create 'Multi-Million Dollar' Fund To Help Customers
NEW YORK (CBSNewYork/AP) -- RushCard, a pre-paid debit card system backed by hip-hop mogul Russell Simmons, will create a 'multi-million dollar' fund to help cover costs for thousands of users who suffered as the company endured technical issues.
The pre-paid debit cards went offline earlier this month, leaving users unable to access their accounts -- some for up to as long as two weeks. The technical issues were attributed to a switch to a new payment processor, a division of Mastercard.
Simmons has been very vocal about the incident on his Twitter account, even inviting users to personally message him about their issues.
The company initially declared a fee holiday. Now, with the new fund, users can be compensated if they can prove they suffered from a financial setback -- like late fees or lost apartment deposits -- due to RushCard issues, the company said.
Many RushCard customers are low-income minority Americans who don't have traditional bank accounts. Without access to their money stored on their RushCards, some customers said they could not buy food for their families, pay bills, or pay for gas to get to their jobs.
According to the RushCard website, the service allows users to receive money up to two days sooner with direct deposit and pre-paid plans.
Simmons has also said he's been compensating RushCard users out of his own pocket. The fund is designed to formalize what he says he's already been doing. An unannounced third-party will run the fund and RushCard said regulators are being consulted to make sure the fund is properly administered.
Federal regulators, including the Consumer Financial Protection Bureau, said they are now looking into what happened at RushCard. At least one class-action lawsuit has been filed.
Simmons welcomed the investigation with a series of tweets on Thursday.
RushCard has not yet laid out a timetable for when this fund will be implemented, or what criteria or documentation would be required to get repaid.
The exact size of the fund will be determined based on the number of customers in need of compensation -- likely in the tens of millions of dollars. RushCard, MasterCard and Metro Bank, the custodian bank used to load money onto the card, will contribute to the fund.
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