The past week has been a nightmare for Americans who use Russell Simmons' pre-paid RushCard debit cards and have been completely unable to access their money, including recent paychecks, thanks to glitches arising from a "technology transition."
Today marks the eighth day some customers are unable to access their funds.
On its own, that's stunningly awful. But RushCard, founded by Simmons in 2003, is specifically marketed to the 68 million Americans who can't access traditional banks and credit cards — which, according to the Federal Deposit Insurance Corp., tends to be "non-Asian minorities" and those who are "lower-income, younger, and unemployed." That is, the precise group of people who would be hit hardest by such a colossal failure.
"To those impacted, we can't begin to express both how sorry we are for the hardships that you've experienced and our commitment to making this right," RushCard CEO Rick Savard said in an emailed statement.
"At this time, our system is up and running and we are processing deposits and transactions," he said. "A small number of accounts are still in an inactive state. We have set up command centers in NYC and Cincinnati to begin outreach to those who remain affected. RushCard employees are working around the clock to get every single customer full access to their funds."
The company's Facebook page has been flooded with complaints and pleas for help from frustrated Americans who can't access money or decent customer support. Simmons posted an apology video to his Facebook page last week and has been apologizing and promising to fix the situation from his Twitter account, which has the handle @UncleRUSH. Today, he opened his Twitter account to DMs from customers who are still facing problems.
On Saturday the company also promised to suspend all fees from Nov. 1 through Feb. 29, 2016. The company charges up to $10 to activate cards, $7.95 in monthly fees and $2.50 for out-of-network ATMs and over-the-counter withdrawals.
But the apologies and promise of a fee holiday ring hollow to customers who have had their lives thrown into disarray in the past week, especially those who are still having trouble getting their money. Simmons drew particular flack for tweeting Saturday that he was "praying" for those "who have been and those who still are affected by the tech change at Rushcard."
RushCard started running a scheduled maintenance a week ago on Oct. 12, which ran longer than expected. That's when users started complaining their cards weren't working at places like gas stations and restaurants. The next day, on Oct. 13, the problem got way worse — direct deposits weren't making it into accounts, and users were staring at $0 balances on their accounts. Since then, RushCard and Russell Simmons' Facebook page have been overrun with furious complaints from customers unable to pay rent, cell phone bills or purchase groceries and facing incredibly long wait times to speak with a customer service rep.
Simmons started RushCard for Americans "who cannot or choose not to establish a traditional banking relationship," according to its website. The service, still owned by his company UniRush LLC, says that after it was created, "those that found themselves left behind by traditional banks found an on-ramp to better financial services." The company doesn't say how many customers it currently has, but in 2009, Simmons said it had more than 1.5 million members.
About 68 million Americans either don't have bank accounts or rely on services like check cashers and pawn shops to supplement their bank accounts, according to a 2013 survey by the FDIC. About 22% of households without bank accounts used a prepaid card in the year up to the FDIC survey, compared with 5.3% of "fully banked" households.
RushCard has been criticized for charging high fees in the past, and UniRush LLC has fielded more than 700 Better Business Bureau complaints in the past three years. Simmons has contended that RushCard does not charge unusually high fees, and "gives underserved communities the tools to get their money right."
Last year, Consumer Reports rated RushCard as No. 4 on a list of prepaid cards used as bank substitutes, after Bluebird, Chase Liquid and American Express Serve.
"Prepaid cards are a safe, viable and responsible option for millions of Americans who need an alternative to traditional banking, check cashing and credit products," Simmons wrote in a September 2013 editorial. "Our cards give them the ability to shop the web, pay bills online, and perform other banking functions like remote check capture, expense tracking and goal-setting, all while avoiding going into debt or racking up overdraft fees. Our customers thank us every day for the level of discipline we help them practice."
In an ongoing effort to upgrade and create new services for our customers, RushCard underwent a technology transition to a new transaction processing partner last Monday morning. During this process, many of our customers were adversely affected when the technology that was used to transition their accounts did not work as planned.To those impacted, we can't begin to express both how sorry we are for the hardships that you've experienced and our commitment to making this right.At this time, our system is up and running and we are processing deposits and transactions. A small number of accounts are still in an inactive state. We have set up command centers in NYC and Cincinnati to begin outreach to those who remain affected. RushCard employees are working around the clock to get every single customer full access to their funds.As a thank you to our customers for sticking with us and to support their cash needs during the upcoming Holiday season, we've declared a Fee Holiday period from November 1, 2015 to February 29, 2016. Customers can use their RushCards without incurring any fees from our Fee Schedule without taking any extra steps to participate in this special offer. For more details, visit https://blog.rushcard.com/rushcard-fee-holiday/"We are not done yet. You will hear more from us in the coming days about how we will continue to make good on our customers' trust.We want you to know how much we appreciate your loyalty and continued commitment to our company.