In a press release today, RushCard said that it would make its cardholders whole for losses they had when the company’s processor conversion left people without access to funds.
Today, RushCard pledged that it will reimburse cardholders who experienced financial losses as a result of the temporary service disruption during its recent technology conversion. RushCard’s partners – MasterCard and MetaBank – are supporting the company as it works to restore the faith and trust of its customers who have been harmed.
The company said that problems due to the processor conversion have been resolved and any current problems are unrelated to the outage.
The incident has led consumer advocates to call for more regulations and to ask the Consumer Financial Protection Bureau to address the issue, according to NBC News. The CFPB has prepaid card regulations in development, and they are expected to be finalized early next year.
Consumer groups have asked the Consumer Financial Protection Bureau to look into what happened. On Monday, a joint letter from 11 advocacy organizations urged regulators to address the legal gaps that leave prepaid cardholders without the same consumer protections as regular bank customers.
While it is reasonable to use the event as a call to action, regulators should be very careful to understand exactly what happened before trying to make any changes. The problem here was a technical one and not one due to the nature of prepaid. The conversion process is one that is complex, and all the companies involved only make money when things go smoothly. If the wrong rules are put into place, it could actually complicate something that is difficult already and lead to future problems.
Also, as RushCard moves forward, it needs to be given time to make people whole. The reimbursement process for cardholders will likely be a long and slow one. RushCard will need to weed out people making false claims and verify how much people really should be owed.
The prepaid industry needs to examine this case and learn what it can about contingency planning and what to do when things go wrong. The fallout from this event will no doubt affect the prepaid industry as a whole and issuers, processors, and program managers should be prepared to address concerns about their own systems regardless of whether they are planning conversions.
Overview by Ben Jackson, Director, Prepaid Advisory Service at Mercator Advisory Group
