RushCard has agreed to a preliminary settlement of $20.5 million to resolve thousands of customer claims that their accounts were frozen last year.
The prepaid card company, whose management team includes the hip-hop mogul Russell Simmons, suffered a glitch in October after it changed payment processors. The incident affected more than 442,400 users, who were unable to access funds and paychecks or to pay bills through their RushCard accounts; 132,593 experienced “residual disruption” for several days.
The settlement, first reported Friday by The Washington Post, includes $19 million to reimburse customers for costs they may have had to face after losing access to their accounts and $1.5 million for attorney fees. It is still pending court approval.
Some of the compensation that customers may have already received, like $25 credits and fees the Cincinnati company had waived between November and February, are included in the settlement. Customers can file claims to be reimbursed for overdraft charges or late payment fees they may have had to pay during the freeze.
The Consumer Financial Protection Bureau denied RushCard's request for more time to provide it documents and other information for a CFPB investigation. The agency has not commented on the matter.
