RushCard To Pay $19M To Customers After Weeks-Long Glitch Last year

[allheart55 Cindy E]

 

 

Last October, thousands of unbanked consumers who rely on prepaid RushCards were unable to access their funds because of a technical glitch. After toying with the idea of creating a compensation fund for those customers, RushCard announced Thursday that it will pay at least $19 million to card users affected by the weeks-long outage.

 

RushCard will provide at least $100 to each user who could not access their funds during the disturbance as part of an agreement to resolve a class-action lawsuit [PDF] against the company, The Associated Press reports.

 

Compensation could reach as much at $500 for customers who can provide documentation of losses they incurred because of the outage.

 

RushCard previously reimbursed customers for the fees typically levied on the cards. Including those payments, a rep of the company says that RushCard will pay out $19 million to resolve the situation.

 

“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.

 

According to the class-action lawsuit, holders claim they were subjected to a longer than anticipated disruption of service between Oct. 12, 2015 and Oct. 31, 2015, which left them unable to access their RushCard accounts and their funds.

 

As a result, they suffered economic harm due to missed bill payments and the inability to pay for their daily necessities such as food, rent, electricity and gas during the service disruption.

 

Cardholders claim that even after they regained access to their accounts, they noticed discrepancies in their account balances. Some cardholders were reportedly charged for balance inquiry fees for the times they attempted to draw money from ATMs while the system was down.

 

Problems with the RushCard first surfaced late on Oct. 11, when the company experienced a disturbance during a “technology transition,” the company said.

 

Customers reported in October that they were denied access to their funds, or had accounts that incorrectly showed a $0 balance.

 

“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,” RushCard CEO Rick Savard said in a statement at the time. “RushCard is working around the clock to resolve all of these matters.”

 

Nearly two weeks after the issues began, the company said it would waive all fees for new and current users between Nov. 1 and Feb. 29, 2016 as an incentive to stay with the company. At that time, the company said access to funds had been restored for most customers.

 

Consumer advocates and regulators quickly took issue with the RushCard debacle.

 

CFPB director Richard Cordray issued a statement regarding the problem, noting that the agency would take direct action “to get to the bottom of this situation.”

 

A coalition of consumer groups also chimed in, pointed at the incident as evidence that federal regulators need to do more to protect prepaid cardholders.

 

Additionally, Consumer Reports announced that it would suspend its RushCard recommendation for a period of time in light of the company’s technical issues.

 

RushCard to pay $19 million to users for last year’s outage [The Associated Press]