Simmons has touted his product as a lifeline for the disadvantaged who are often unable to open a regular account because of poor credit or financial hardship. “The only reason people bought them was because it was associated with Simmons.”Īlso Read: Russell Simmons Signs Overall Deal With HBOįounded by Simmons in 2003, the RushCard can be used to make payments and withdraw cash at ATM machines without being linked to a traditional bank account. “RushCard was one of the worst ones,” said Valenti. Others celebrities have dabbled in the prepaid card business, including reality star Kim Kardashian, who terminated her relationship with the company issuing her card after the Connecticut Attorney General wrote a letter questioning the legality of the card’s “pernicious and predatory fees.”īut critics argue Simmons’ fees are some of the most egregious. In the last decade, prepaid credit cards have grown into a lucrative business, with retail purchases made on the cards topping $200 billion dollars last year, about 5 percent of all retail spending in the U.S. “The CFPB is taking direct action to get to the bottom of this situation that may have harmed thousands of innocent consumers already,” Consumer Financial Protection Bureau Director Richard Cordray said in a statement on Friday.Īlso Read: Russell Simmons Fires Back at Geraldo Rivera's Rap Remarks: 'He's Not Relevant' Simmons and RushCard did not respond to TheWrap’s requests for comment.Īdding to Simmons’ problems, federal authorities are now looking into the RushCard meltdown. “Like other celebrity cards, this card has earned a shady reputation.” “This is a card with predatory practices like charging people every time they swipe,” Valenti explained. Judging by the user profiles of angry customers posting comments on the RushCard Facebook page, many of those cardholders are African-American.Īlso Read: Anti-Defamation League Outraged By Russell Simmons Comparing Horse Carriages to Holocaust, Slavery District Court in New York, RushCards are mostly used by “poor and working class Americans” who don’t have traditional bank accounts. Simmons has faced intense scrutiny since his pre-paid Visa debit cards stopped working for thousands of customers earlier this month, with the New York Times, Washington Post, Wall Street Journal and several urban blogs covering the controversy ad nauseam.Īccording to a class action lawsuit filed Friday in U.S. 30, to access government benefits directly deposited into their RushCard accounts, including Social Security and veterans benefit payments. Although he admitted people may have to wait until Oct. “We can announce today that all major functionality, including 2 day advance direct deposits and card-to-card transfers, is restored,” Simmons posted on Twitter, Instagram and the RushCard Facebook page Monday. Simmons continued his damage control blitz across social media this week, telling cardholders that the RushCard fiasco is fixed.Īlso Read: Russell Simmons Says His Debit RushCards 'Working' After Lawsuit, Federal Investigation “This is a business of greed and exploitation of ignorance.” “ Russell Simmons has lied to the African-American community for years telling people that RushCard helps you build credit,” Ryan Mack, financial expert and contributor to Financial Juneteenth, a site dedicated to empowering the black community, told TheWrap. “Reputation is a hard thing to build, but easy to lose.”Īnother expert said that Simmons had done a grave disservice to the African-American community who he was purporting to help. “He should be very worried right now,” Joe Valenti, director of consumer finance at the Center for American Progress, told TheWrap. But the hip-hop mogul’s problems are just beginning. Russell Simmonssays the technical issues plaguing his pre-paid debit RushCard are over.
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