By Maureen Mahoney, Consumers Union
Thanks to the Consumer Financial Protection Bureau, customers of RushCard, the prepaid debit card, will get some much-needed relief after a massive breakdown in October 2015 that left tens of thousands of consumers unable to access their own money.
The consumer watchdog ordered RushCard to return $10 million to consumers for what they called a “preventable failure” that left many consumers struggling to pay for food, medicine, and even bus fare. The Bureau also fined the company $3 million dollars.
The action comes as important CFPB rules on prepaid cards have come under immediate threat from the same banking interests that brought the economy down just a few years ago. Last night, friends of the banking industry filed a motion in the Senate to challenge these rules, which ensure that people like you can keep their money safe and avoid unfair fees.
That’s not all – the CFPB itself is also under concerted attack by the banking industry and its allies. Opponents of the CFPB seek to change its structure and funding to slow its progress and starve it of the funds it needs to hold the banks accountable – to keep it from taking important actions like returning consumers’ hard-earned money.
RushCard’s lapses upended the daily lives of thousands of consumers. 270,000 people at the time had their monthly incomes deposited directly onto their RushCards, their primary payment method. Many customers were unable to access their money for 9 days.
RushCard customer Marcia Davis of Baltimore, Maryland told Buzzfeed at the time that her inability to pay for the bus had a ripple effect on her family: “My 13-year-old is going to school late to take my 5- and 7-year-old to school. My 17- and 14-year-olds’ phones are off. I live in Baltimore City, they need them in case something happens. I need them to be able to call me.”
The CFPB also took RushCard to task for its abysmal customer service during the fiasco. Davis told Buzzfeed, “They’re trying to manually update it, that’s the same answer I get every time, that the system is down and they can’t look into my account. They’re saying they don’t know a timeframe.”
This latest action by the CFPB shows how important it is to maintain a strong, effective financial watchdog working for consumers. Under Director Richard Cordray’s leadership, the CFPB has an impressive track record: it has returned almost $12 billion to consumers in restitution for bad financial practices, and has issued important regulations at a breakneck pace that help level the playing field for consumers.
As Noelle from Los Angeles tells Consumers Union: “Consumers need an advocate to help protect them, especially consumers who are struggling to get by and don’t have the means to hire an attorney or fight these powerful companies.”
Now more than ever, we need your help to maintain important consumer protections. And the CFPB needs your help to go up against powerful banking interests. Please sign our petition to keep a strong CFPB!