NEW YORK–Thousands of people who use a prepaid card provided by RushCard have been reporting problems accessing their funds.
RushCard, founded in 2003 by hip hop artist Russell Simmons, said a technical problem that had been affecting some cardholders had been fixed, but the New York Times reported that thousands of RushCard users continue to “vent their frustration” with the cards, especially in social media.
The New York Times reported that RushCard’s problems started over the Columbus Day weekend, when it switched from one processing technology provider to another. Customers reported problems gaining access to their funds, swamping the company’s telephone service center and website, the Times said.
The Times reported that data has shown that nearly a quarter of prepaid cardholders earn less than $15,000 a year and use the cards due to an inability to get another type of card, as well as an inability or unwillingness to open a traditional account at a bank or credit union.
“It is outrageous that consumers have not had access to their money for more than a week,” said Gail Hillebrand, associate director for consumer education and engagement at the CFPB in a statement to the New York Times. “We are looking into this very troubling issue. Consumers increasingly are relying on prepaid products to keep their funds, make purchases and manage their money.”
According to RushCard, all of its customers’ money is covered by FDIC insurance through its issuing bank, MetaBank, and that its accounts were compliant with federal regulations regarding electronic fund transfers.
RushCard declined to say how many cardholders it has in total, other than to say it’s in the “hundreds of thousands.”
The CFPB in July of 2014 began accepting consumer complaints about prepaid cards through its website and toll-free complaint line. As of this month, it has received 2,700 complaints, the Times reported.
RushCard said it has set up “command centers” in New York City and Cincinnati to begin outreach to those who remain affected.”