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Friday, October 23, 2015

RushCard -Thousands of Prepaid Debit Card Users Cannot Access Funds


"A woman in Philadelphia was turned away from a McDonald’s when her card was declined. Another woman, in Decatur, Ga., couldn’t pay for her husband’s heart medication. And an autoworker in Detroit accepted food from colleagues because she had no access to her money.

In 2012, the most recent year available, prepaid cards held $65 billion, more than double the amount from just three years earlier, according to a survey by the Pew Charitable Trusts.
Nearly a quarter of these cardholders earn less than $15,000 a year. They are forced to turn to prepaid cards because they lack the standing to get a credit card or are unable or unwilling to open a traditional bank account.
In an email statement on Tuesday, Mr. Simmons said: “We will fix these problems and continue to serve the populations I care deeply about.”

The episode has now attracted the attention of regulators in Washington.
“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 Consumer Financial Protection Bureau. “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.”
RushCard said that its customers’ money was covered by Federal Deposit Insurance Corporation insurance through its issuing bank, MetaBank, and that its accounts were compliant with federal regulations regarding electronic fund transfers.
The company won’t say exactly how many cardholders it has, except to say they number in the “hundreds of thousands.”
Still, the potential market is vast. In its most recent survey, the F.D.I.C. counted 25.4 million people in the United States in 2013 who had no bank account. Another 67.5 million had an account but also relied on nonbank financial services such as check-cashing stores or payday lenders.

Jonathan Mintz, a former commissioner of New York City’s Department of Consumer Affairs, said a lack of safe banking options threatened to worsen economic inequality.
“Without financial tools that are fair, all you can do is basically tread water,” said Mr. Mintz, who is now chief executive of the Cities for Financial Empowerment Fund.
For T’Challa Williams in Decatur, Ga., the problems with RushCard became a matter of life and death. Her husband has heart disease, she said, and needs medication to regulate his condition.
Last Wednesday morning, Ms. Williams tried to withdraw money that her father had loaded onto her card to pay for the medicine. But the money he had loaded was not there.
When Ms. Williams called RushCard, she was on hold for an hour and a half, and on a second call for three hours. "  http://www.nytimes.com/2015/10/21/business/dealbook/after-technical-snag-fury-and-no-cash.html?smid=tw-share

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