The Consumer Financial Protection Bureau looks to finally be stepping in to help consumers being harmed by the crisis at prepaid debit card provider RushCard.
After more than a week of complaints from RushCard customers who say their cards were unusable and that their direct deposits had gotten lost, the CFPB has issued an official statement from director Richard Cordray:
"The CFPB is taking direct action to get to the bottom of this situation that may have harmed thousands of innocent consumers already. Today, I have personally spoken with UniRush CEO Rick Savard to make sure that action is being taken to address harm that has occurred, the harm that may still be occurring, and the cascading financial effects of consumers not having access to their funds for more than a week. We have stressed that RushCard and its relevant business partners must ensure that no other consumers will be denied access to their funds. Further, we indicated that the CFPB is prepared to use all appropriate tools at our disposal to help ensure that consumers obtain the relief that they deserve. We also agreed that the most constructive path forward for UniRush to reduce consumer harm is to take immediate action to resolve these issues. The CFPB has also engaged in discussions with fellow regulators, including the Office of the Comptroller of the Currency and the Federal Trade Commission, to ensure a comprehensive response that addresses the situation quickly and holds accountable all of the parties involved to make consumers whole. Affected consumers should continue to file complaints directly with UniRush or with the CFPB at consumerfinance.gov or toll-free at 1 (855) 411-2372."
Presumably, this will force RushCard to provide some relief to beleaguered customers, who, as Cordray says, are dealing with "cascading financial effects" that include car repossession, eviction and cut-off utilities. RushCard focuses its efforts on serving consumers who are unbanked and those who have used "alternative" financial services like payday loans. This type of consumer tends to have little in the way of a financial cushion when income dries up.
Whether the CFPB's investigation will result in financial penalties for RushCard is yet to be seen. Under the Dodd-Frank financial reform law, the CFPB has authority to punish companies that engage in "unfair, deceptive, and abusive acts and practices." But the definitions of those practices put out by the CFPB seems to focus on intentional acts to shortchange or mislead customers -- not the type of gross incompetence that caused RushCards' customers problems.
@claesbell It's the incompetence that's the key, from what I understand. If RushCard pays up then it could get out of an enforcement action
— Evan Weinberger (@reporterev) October 23, 2015
What do you think? Should RushCard be punished by the federal government for the harm it's caused?
Follow me on Twitter: @ClaesBell.