RushCard has agreed to a preliminary settlement of $20.5 million to resolve thousands of customer claims that their accounts were frozen last year. 

The Cincinnati-based prepaid card company, whose management includes hip-hop mogul Russell Simmons, experienced a glitch in October after it had changed payment processors, affecting more than 442,400 users unable to access funds and paychecks or pay bills through their RushCard accounts and 132,593 of whom experienced “residual disruption” for several days.

The settlement, first reported by the Washington Post Friday, includes $19 million to reimburse customers for costs they may have had to face after losing access to their accounts and $1.5 million for attorney fees. It is still pending court approval.

Some of the compensation customers may have already received, like $25 credits and fees the company had waived between November and February, are included in the settlement. Customers can file claims to be reimbursed for overdraft charges or late payment fees they may have had to pay during the freeze.

The Consumer Financial Protection Bureau denied RushCard's request for more time to provide it documents and other information for a CFPB investigation. The agency has not commented on the matter.

 

 

 

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry