Russell Simmons’ RushCard creates fund to help customers
RushCard, the pre-paid debit card backed by hip-hop mogul Russell Simmons, will create a “multi-million dollar” fund to help cover the costs that its customers suffered while the card was beset by technical problems earlier this month.
RushCard customers who can show they incurred late fees, lost a deposit on an apartment, or any such financial setback as a direct result of the RushCard problems will be compensated, the company said.
“This whole situation has been devastating for them, and we want to make sure they are made whole,” said Russell Simmons in an interview with The Associated Press Thursday.
Technical problems tied to RushCard moving to a new payment processor, a division of MasterCard, caused hundreds of thousands of RushCard customers to lose access to their money for as many as 10 days earlier this month. 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 even pay for gas to get to their jobs.
The debacle swept through social media. Simmons’ Twitter and Instagram accounts became places for RushCard customers to plead for access to their money.
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.
Since the problems began, Simmons 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 administrator will run the fund and RushCard said regulators are being consulted to make sure the fund is properly administered.
The exact size of the fund will be determined by the size of the damages incurred by RushCard users. It is likely to be in the tens of millions of dollars.
“We don’t have a number yet because it really is whatever it takes to make good with our customers,” Simmons said.