Thank you all for joining me on this call. Today, the Consumer Bureau is taking action against UniRush, which administers the RushCard, and Mastercard, its payment processor. This action stems from a meltdown in October 2015, when tens of thousands of users of the RushCard found themselves locked out of their accounts. Although their money had been prepaid into their accounts, they found they could not access their money or make any payments. Some customers reported that their cards were declined. These service disruptions dragged on for days or even weeks. Consumers could not use their own money to pay for basic living expenses and necessities. Many racked up late fees and other penalties. Throughout this frustrating saga, UniRush’s customer service efforts failed to address problems adequately. All of this stemmed from a series of failures that should have been anticipated and prevented.
Today, we are ordering UniRush and Mastercard to pay restitution to tens of thousands of consumers, which is estimated to total around $10 million. The companies will also pay a civil money penalty totaling $3 million as further deterrence to avoid such problems in the future.
UniRush is the program manager for RushCard, a prepaid debit card co-founded by entrepreneur Russell Simmons, and maintains the cardholder website. Mastercard Payment Transaction Services is the current payment processor for the RushCard, and is a division of Mastercard International.
UniRush advertises its prepaid card as a way for consumers to get their payroll funds “up to two days sooner” through direct deposit of their wages or government benefits onto the card. Many RushCard users are unbanked – meaning they do not have a traditional bank account and often are economically vulnerable.
In 2014, UniRush named Mastercard as its new payment processor. The changeover took place from October 10 to October 12, 2015. At that time, RushCard had about 650,000 active users, and about 270,000 of them received their direct deposits on the RushCard. The planned blackout period during the switch, when RushCard users could not conduct transactions, was supposed to last several hours. But immediately after UniRush switched to Mastercard, tens of thousands of consumers were jarred by a series of crippling service failures.
By October 15, over 1,000 consumers had their accounts wrongly suspended due to suspected fraud. Thousands more could not make transactions or access funds stored on their RushCards for some days after the changeover, and others could not do so for weeks afterwards. UniRush also delayed processing direct deposits for about 45,000 consumers and improperly returned other deposits, which left people unable to access their paychecks or government benefits so crucial to their financial lives.
Still other consumers had their deposits double posted, or had their debits applied late. This led thousands of them to make the mistake of spending more money than they thought was available on their RushCard. UniRush used their subsequent cash loads or deposits to recoup these losses without notice to the affected consumers.
Adding insult to injury, UniRush’s customer service system utterly failed to meet the needs of its customers. UniRush had no contingency plan that could handle the surge in customer complaints. Additional customer service agents who were hired were not sufficiently trained, which meant they often were unable to resolve people’s questions and complaints.
The Consumer Bureau is authorized by law to take action against institutions that engage in unfair, deceptive, or abusive acts or practices, or that otherwise violate federal consumer financial laws. Based on our investigation, we determined that both UniRush and Mastercard acted unfairly by failing to properly prepare for the change in processors and failing to adequately test the new system. Also, UniRush’s handling of cardholder accounts after the changeover caused consumers substantial harm.
In addition to paying restitution and civil penalties in the amounts described earlier, UniRush and Mastercard also must devise a plan to prevent any of these things from happening again in the future. In particular, this plan must prevent the kinds of service disruptions that happened here. The companies also must ensure an adequate response to such failures if they do recur, which includes providing for a sufficient customer service capacity.
By botching the changeover to a new payment processing platform, UniRush and Mastercard betrayed the trust of tens of thousands of consumers who rely on the RushCard to conduct and manage their day-to-day finances. For many, it is their only way to get direct deposits, transfer payments, or access the financial system to pay for basic living expenses and daily necessities. Through their failures, UniRush and Mastercard caused serious problems for the financial lives of many consumers. Going forward, we are putting the prepaid industry on notice that companies will face the consequences if consumers are denied access to their money or to the services they pay for and on which they have the right to depend. Thank you.
The Miss april is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.