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Rushcard / Via Facebook: RushCard

RushCard, the Russell Simmons-backed prepaid debit card company, will pay millions to settle charges relating to a system failure that “cut off tens of thousands of vulnerable consumers from their own money,” the federal consumer financial regulator said Wednesday.

The Consumer Financial Protection Bureau ordered Mastercard and RushCard parent UniRush, to pay $3 million in penalties and $10 million in compensation to customers affected by the failure. UniRush settled civil lawsuit over the outage for $19 million in May, 2016.

RushCard customers lost access to their money for over week in October, 2015, due to a system failure connected to the company's transition to Mastercard's payment processing system. RushCard parent UniRush, founded by hip-hop mogul Russell Simmons, announced this week that it is being sold to prepaid card company GreenDot for $147 million.

“The companies must set things right for consumers and make sure such devastating service disruptions are not repeated,” Cordray said.

A CFPB official said that RushCard users who experienced delayed deposits will get $100 and those who had deposits returned will get $250. UniRush will be responsible for making the remediation payments, the CFPB official said. The refunds will either be credited to customers who are still with UniRush; others will receive a check.

Of UniRush's 650,000 active customers, about 270,000 received some for of direct deposit on a RushCard. The CFPB put the number of customers affected and who will receive restitution in the “tens of thousands.”

The RushCard fiasco generated nearly 1,000 consumer complaints to the CFPB. When the transfer happened, some customers were left behind or had their accounts suspended and did not receive replacement cards, the regulator said. For another 45,000 customers, direct deposits were delayed and for another 2,000 customers they were processed or got returned.

“We are pleased to bring this matter to a close,” Mastercard said in a statement, “allowing us to further enhance the best practices, policies and procedures for prepaid cards at our Payments Transactions Services business.” UniRush and Greendot did not immediately respond to requests for comment.

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