Federal regulators are probing the technical failures at RushCard, the prepaid debit card startup cofounded by hip-hop mogul Russell Simmons.
A statement from the Consumer Financial Protection Bureau on Friday revealed the regulator is looking into why, for more than a week, some consumers who rely on RushCard have been unable to access funds.
“The CFPB is taking direct action to get to the bottom of this situation that may have harmed thousands of innocent consumers already," said CFPB director Richard Cordray.
It added that it had engaged in discussions with the Office of the Comptroller of the Currency and the Federal Trade Commission "to ensure a comprehensive response that addresses the situation quickly and holds accountable all of the parties involved to make consumers whole."
Rick Savard, chief executive and chairman of RushCard, said in a statement late Friday:
"The vast majority of customers have had their problems resolved. We have a handful of people left who are still not able to access correct information about their accounts. Their funds are there but their information is still inaccurate. We are working to contact them individually to assist them with their needs.
"Very soon RushCard will be making a significant announcement on how we plan to make this right with our customers who were severely inconvenienced and in some cases suffered hardships. We have worked extremely hard in the past few years to build a product that is safe, secure and cost effective for our customers. We are going to do everything we can for our customers and for the communities in which they live to restore their trust and faith in us. "
Russell Simmons, cofounder of RushCard, said in the statement:
"I am personally reaching out to hundreds of customers to help them resolve their issues. I want to make sure that every single RushCard customer today is able to use the card as I intended them to use it: to pay their bills, to get gas, to feed their families and help them manage their finances. This has always been my mission. To financially empower those families that have been shut out of the economic mainstream."