Russell Simmons announced Thursday that he's creating a multimillion-dollar fund to compensate customers of RushCard, a prepaid debit card that he founded.
"RushCard and I continue to be completely committed to making sure each and every one of our customers is made whole," Simmons said in a statement.
Customers were left in a lurch earlier this month for as many as 10 days when they lost access to the funds saved in their RushCard accounts. The fund will be used to reimburse customers who had incurred late fees to overdue bills or for any other financial hardships they may have faced at the time.
The company told the New York Times that "hundreds of thousands" of customers were affected and that it was discussing a reimbursement fund with regulators and was waiting for their approval to start compensating customers. A spokesperson for the CFPB said that it does not comment on potential or current investigations.
RushCard said it was working with MetaBank, its banking partner, and MasterCard, which does processing, to work with affected customers.
Richard Cordray, the head of the Consumer Financial Protection Bureau, said in a statement last week that the regulator "is prepared to use all appropriate tools at our disposal to help ensure that consumers obtain the relief that they deserve."
The company said that "specific details of the reimbursement program are being finalized," and that the company "will work with those who have sustained losses to make sure our customers are properly reimbursed."
Simmons said in the statement that the reimbursements "will not occur overnight" but that it was acting "as quickly as regulators will allow" and had made some reimbursements on a "case-by-case basis."
The problem started for RushCard users Oct. 12 after scheduled maintenance took longer than expected. By Oct. 13, some customers were no longer receiving direct deposits and seeing zeroed-out accounts.
RushCard, along with other prepaid debit cards, targets the millions of low-income Americans who struggle to be served by the traditional banking industry.
Here is the full statement:
Today, RushCard pledged that it will reimburse cardholders who experienced financial losses as a result of the temporary service disruption during its recent technology conversion. RushCard's partners - MasterCard and MetaBank - are supporting the company as it works to restore the faith and trust of its customers who have been harmed.
Since the interruption of cardholder services, RushCard executives and staff, including Russell Simmons, have been focused on working to address account problems and help resolve outstanding account balance issues and questions. MetaBank and MasterCard’s prepaid processing group have been working closely with the company to operationally support RushCard's efforts to address the needs of customers nationwide.
The RushCard team remains dedicated and committed to addressing cardholders concerns, including remediating appropriate cardholder claim of losses related to this event. Specific details of the reimbursement program are being finalized and will be announced separately pending review by financial regulators as well as respected community leaders and banking industry advisors. Through this program, RushCard will work with those who have sustained losses to make sure our customers are properly reimbursed.
RushCard systems are now fully restored. For the past week, RushCard transactions have been processing as usual, with two-day advance direct deposits and card-to-card transfers restored as of Monday. At the same time, RushCard is working with a handful of customers that appear to have issues that are unrelated to the conversion.
Russell Simmons, co-founder of RushCard, stated today, "RushCard and I continue to be completely committed to making sure each and every one of our customers is made whole. I'd like to thank MetaBank and MasterCard for their support in this process and their partnership as we emerge from this incident a stronger and better company. I want my customers to know that we will restore RushCard as the gold standard of services and trust in our community. While the reimbursement and review process will not occur overnight, we will act as quickly as regulators will allow and are already doing so on a case-by-case basis. In the meantime, I will continue reaching out individually to as many of you as I can. I want to assure those who rely on RushCard that we are analyzing and dissecting every facet of the transition that led to your difficulties and I will not rest until we have regained your trust."