Mastercard (NYSE:MA) and UniRush, the company that sells RushCard-brand prepaid debit cards, have been ordered to pay $13 million in fines and customer restitution over issues with the cards. The Consumer Financial Protection Bureau announced the enforcement action Wednesday. The total includes $3 million in fines and $10 million in customer restitution. The agency left it up to the companies to decide how much each will pay.
The fine stemmed from a 2015 system failure that left thousands of customers unable to access the money in their accounts. The CFPB said that the problems were caused by a lack of preparation and coordination by the companies before Mastercard became UniRush’s main payment processor. Customers were unable to withdraw cash, receive direct deposits, make purchases, or get accurate account balance information.
The issues created confusion and sparked outrage among RushCard users. Thousands of customers were affected by the outage. Following the incident, UniRush canceled all card fees for four months. In May, UniRush settled a class-action lawsuit over the matter, agreeing to pay $19 million to roughly 300,000 customers affected by the outage. UniRush spokeswoman Kaitlin Stewart said, “Since the event in 2015, we believe we have fully compensated all of our customers for any inconvenience they may have suffered.”
The announced enforcement action settles the CFPB’s investigation into the matter. Mastercard spokesman Seth Eisen said the company is “pleased to bring this matter to a close.” Neither Mastercard nor UniRush admitted or denied wrongdoing as part of the settlement.
UniRush is being acquired by Green Dot Corp of Pasadena, California. Green Dot has agreed to pay $167 million for the company and the acquisition is expected to close in the next few months. Green Dot said that cost of any regulatory action against UniRush would be borne by the company’s current owners. The company was founded by hip-hop industry veteran Russell Simmons in 2003.
Green Dot also recently had an outage that left many customers unable to access their money. In May 2016, customers of Green Dot complained of account access problems when the company switched to Mastercard from another payment processing firm. It’s unclear how many Green Dot customers were ultimately were affected by the outage.
The problems with the changeovers have highlighted the financial vulnerability of prepaid card users. Many prepaid card users use prepaid accounts because they can’t open a bank account. If they cannot access the money in their account, they cannot pay for rent, food, electricity and other critical expenses. For people living on the financial edge, one missed payment can set off a domino chain of consequences that can take months or years to extract themselves from.