You may have seen commercials for Russell Simmon’s Rush Card during old reruns of 90s sitcoms or in the breaks between 106th and Park. But the company behind the prepaid credit card aimed at working class urban families is being investigated for misleading customers.
The Florida Attorney General’s Office has issued subpoenas against five prepaid debit card companies claiming they may be forcing consumers to pay hidden fees each time they make a purchase.
Subpeonas were issued against five prepaid card companies including the makers of the RushCard, a company owned by Def Jam co-founder and hip hop mogul Russell Simmons. The investigation, which is being overseen by Florida Attorney General Pam Bondi through the Economic Crimes Division, will determine if some of these companies misrepresented their products by promising to improve credit scores.
Simmons’ office commented on the investigation a month ago, saying that because subpoenas had not been issued they could not comment on any details. In that statement, Simmons said:
“I completely welcome any and all debate, discussion and understanding about the best companies in the prepaid debit card industry, which my RushCard company helped found. The RushCard is extremely transparent in terms of the presentation of its fees and its services. All of the information is available for everyone to see on rushcard.com. As a leader in this industry, I encourage a full understanding of RushCard’s transparent pricing, and valuable services, especially for those who have been turned away or let down by traditional banks.”
According to My Bank Tracker, nearly 60 million Americans currently use the RushCard. Part of the cards appeal has been its claim of low fees, with its website claiming card holders would pay no more than $15.90 in annual fees using the card as opposed to the $40 and upwards they would for a checking account from a major bank.
The cards have become an appealing option for those looking to avoid banking fees and many consumers are making the switch. Just last week, American Express announced that they would be issuing their first ever prepaid credit card option to reach “a broader swath of consumers.” The move is a marked departure from the company’s focus on more affluent clientele. While there have been studies supporting pre-paid credit card holders save money on bank fees, the verdict is still out on whether or not those saved fees lead to better financial habits or higher credit scores.
In a press release commenting on the ongoing investigation, the Florida Attorney Generals Office said:
The Attorney General’s Office has reviewed complaints alleging that the companies servicing prepaid debit cards often fail to disclose numerous fees. In some instances, every transaction a consumer makes using a prepaid debit card may be subject to a hidden fee.
Florida Attorney General Bondi said:
“Failing to disclose fees is essentially stealing money from consumers. We will aggressively investigate these practices and ensure that Floridians are protected from hidden fees and charges.”
What do you think of prepaid credit cards are they a smart option for money management or risky for your personal finances? Weigh in Clutchettes and gents- tell us your thoughts!