UniRush, co-founded by music producer Russell Simmons, launched RushCard in 2003 to provide a fresh take on prepaid debit cards.
It also made a big promise: Direct deposit customers could access those deposits two days before the funds would typically be available.
But a series of technical snafus put the company in hot water in the fall of 2015. Now, RushCard customers will see their share of $10 million in restitution as a result of a Consumer Financial Protection Bureau (CFPB) investigation of more than 800 complaints against UniRush.
On top of what it owes customers, MasterCard and UniRush will pay a $3 million fine to the CFPB.
What RushCard Customers Can Expect
UniRush will provide funds directly to customers who were affected in October 2015; amounts will vary.
The minimum redress plan requires UniRush to pay customers the following amounts for inconveniences the botched system conversion created in October 2015:
- $25 to customers whose transactions were denied during the extended blackout period Oct. 12, 2015.
- $150 to customers whose cards were flagged for fraud because the payment processing platform wasn’t configured correctly.
- $100 to customers whose accounts incorrectly said they had a $0 balance in October 2015.
- $100 to customers whose automatic clearing house service deposits didn’t go through during the conversion period and its aftermath.
- $250 to customers whose ACH deposits bounced or couldn’t be processed by UniRush in October 2015.
- $150 to customers who couldn’t access the funds in their accounts.
- $150 to customers who lost their cards or had them stolen, but did not receive a functioning replacement.
- $150 to customers who loaded cash onto their cards but experienced a delay in posting.
- $50 to customers whose card-to-card transfers did not process immediately.
Customers who experienced more than one of these inconveniences may see a considerable payout from UniRush.
If you no longer have an active RushCard account, you’ll receive your payments by mail instead of via direct deposit.
So, What Happened to Everyone’s Money?
UniRush chose MasterCard as its new payment processor in 2014, and a lengthy process followed to prepare the financial management company to switch to the MasterCard system.
When the switch came in mid-October 2015, a host of technological glitches left customers without access to their direct deposits and paychecks. They also couldn’t withdraw cash from their accounts, pay bills with their RushCards or even summon their account information, according to the CFPB. What’s worse, customer service was reportedly scant during this confusing period.
Customers were told there would be a blackout period of five hours in the early morning of Oct. 12, 2015, but the blackout lasted three-and-a-half hours longer than expected, the CFPB found. Approximately 20,824 customers continued to have difficulty accessing and using their accounts over the next several days, with effects rippling into the next few weeks.
Although UniRush designed RushCard to provide customers with easier, faster access to direct deposits, the CFPB’s description of how UniRush “denied consumers access to their own money” during the technical difficulty period is alarming for anyone who’s ever anxiously waited for the next payday to roll around:
UniRush did not accurately transfer all accounts to Mastercard. As a result, thousands of consumers could not access funds stored on their cards for days, or in some circumstances, weeks. Because of Mastercard’s actions, accounts of about 1,110 consumers were incorrectly suspended. UniRush also delayed crediting cash deposits to consumers’ accounts and shut off access to certain funds that consumers put aside for savings. UniRush did not issue a working replacement card to consumers whose cards were lost or stolen during this period.
Many reading about RushCard’s issue may assume it’s something out of either the future or an episode of “Mr. Robot.” But a quickly changing financial landscape and our continuing lean on convenient, connected banking services leave more room for error than any of us might have expected.
Your Turn: Are you a RushCard customer? Will you be waiting for your check?
Lisa Rowan is a writer and producer at The Penny Hoarder.