RushCard to pay $19 million to users for last year's outage

AP News
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Posted: May 12, 2016 3:31 PM
RushCard to pay $19 million to users for last year's outage

NEW YORK (AP) — RushCard, the prepaid debit card company owned by hip-hop mogul Russell Simmons, agreed to pay at least $19 million to compensate its users who were impacted by the company's multi-day outage last year.

The technical fiasco caused tens of thousands of RushCard customers, who are largely poor and minorities, to be unable to access their money for as long as two weeks. Complaints from the outage clogged up the company's customer service lines for days.

According to the agreement filed in a New York court as part of a class-action lawsuit, RushCard will pay at least $100 to each user who could not access their funds. That amount can increase to up to $500 if the customer can document any losses they might have experienced due to the outage.

Including earlier fee reimbursements the company has made, RushCard will have paid out more than $19 million, a company spokesman said.

"We are pleased to have reached this preliminary settlement which will resolve the claims of our cardholders," Rick Savard, CEO of Unirush, the parent company of RushCard, said in a statement.

RushCard's problems started in mid-October, when the company switched payment processors. The transition was botched, and resulting problems caused thousands of RushCard accounts to be frozen.

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 told The Associated Press at the time they could not buy food for their children, pay bills, or pay for gas to get to their jobs.

The outage became a large issue on social media, where RushCard users flooded the Instagram, Facebook and Twitter accounts of Russell Simmons to complain about their inability to access their money.

Simmons repeatedly apologized for the problems, often personally responding on social media.

The issue became so large that it caught the attention of the Consumer Financial Protection Bureau, the federal watchdog agency for the financial industry, which started an investigation into the company.

The settlement was reported earlier by the legal news outlet Law360.