The processor glitch that affected a portion of RushCard customers continues to cause concern among regulators and the press, but the coverage gives a false sense of danger.
The Consumer Financial Protection Bureau released a statement on its Facebook page encouraging people to stop their direct deposits, monitor their accounts, and negotiate late fees with billers. They also encouraged people to complain to the agency.
We are looking into this very troubling issue. Consumers increasingly are relying on prepaid products to keep their funds, make purchases, and manage their money. Customers who are still affected by this situation should consider stopping their direct deposit, so that they can get their next paycheck by check or have it deposited in another account. Consumers can also ask anyone who has charged them a late fee on a payment affected by this delay to waive that fee. More generally, all consumers using prepaid cards should watch the transactions on their accounts, and report any problem promptly to the prepaid card issuer.
In a follow up piece, the New York Times wrote that some cardholders say they are having ongoing problems, but expanded on the CFPB’s recommendations to help people manage prepaid problems.
The advice is good for anyone who is facing any financial services disruption, and it should not be considered simply a prepaid issue. The other thing that needs to be kept in mind is that this is a rare event. Prepaid programs do not switch processors frequently, and even when they do, most conversions go smoothly.
The other thing that has not been explained is that an outage has no benefits for the provider. Providers have every interest in making sure that their programs run smoothly and that their cardholders can do as much as possible with their cards. This is not to minimize the pain felt by cardholders, but companies facing these problems are not dragging their feet or trying to dodge customer service. They are working to get their business up and running because it benefits them, and more importantly, their customers.
Overview by Ben Jackson, Director, Prepaid Advisory Service at Mercator Advisory Group