UniRush released numbers on how many cardholders were locked out of accounts, while it continued to argue with the CFPB over the timing of the investigation the agency is doing.
The RushCard fiasco that left consumers without access to their prepaid card accounts for days affected more than 132,000 consumers, or about 30 percent of all RushCard customers, the company confirmed Monday.
All 442,400 customers were temporarily blocked from accounts during a planned outage during Columbus Day weekend when RushCard, a prepaid card company co-founded by hip-hop mogul Russell Simmons, transitioned to a new payment processor.
(Read more here: https://www.washingtonpost.com/news/get-there/wp/2015/12/07/more-than-132000-rushcard-users-were-locked-out-of-accounts-for-days/)
Meanwhile, the Consumer Financial Protection Bureau said that UniRush was being uncooperative and denied the company’s request for an extension on its deadline.
The Consumer Financial Protection Bureau sent a civil investigative demand to UniRush, the firm’s parent company, on Oct. 27, asking for information dating back to Jan. 1, 2015, including reports and documents connected to the reasons for the planned system conversion.
The purpose of the demand, the regulator said, was to determine whether any laws were violated.
(Read more here: http://www.nytimes.com/2015/12/04/business/dealbook/rushcard-called-uncooperative-in-debit-card-inquiry.html)
The original demand said that UniRush needed to reply within 10 days.
So, it appears that the CFPB has gone on a fishing expedition. There aren’t any laws on the books about changing business partners, so it is hard to see what CFPB expects to find. The processor transition was designed and expected to be invisible to consumers. Disruptions cost Rush, and every other payments company, revenue because if the cards can’t be used, then the company can’t make money. Yet, it seems as if CFPB thinks there was some kind of gain for Rush and ‘gotcha’ for cardholders. Why?
In a petition to the CFPB in early November, UniRush said that the civil investigative demand issued by the CFPB was overly broad and burdensome because of the short time frame. The CFPB, in a response on Dec. 2, said that neither of these things was true and ordered UniRush to supply all of the information it had within 10 days.
Asking for everything over the course of a year, including information that needed to be gathered from interviews of employees and partners, to be delivered in 10 days may not sound terribly burdensome to an agency that knows it will never face the same request. But for a company trying to make its customers whole again, this could turn into a lot of work at a difficult time.
Overview by Ben Jackson, Director, Prepaid Advisory Service at Mercator Advisory Group
