Less than a year after an outage that locked out customers from their prepaid card accounts, hip-hop mogul Russell Simmons said he is refocusing RushCard by bringing in new leadership and expanding the number of banking services.
UniRush, the parent company for RushCard, announced Thursday that it had appointed a new chief executive. Ron Hynes, who previously worked at MasterCard and worked most recently at mobile payments startup Mozido, replaces former chief executive Rick Savard, who took the helm in 2014.
Simmons, who co-founded RushCard and publicly apologized when thousands of consumers were left unable to access their accounts, said the move is part of a bigger change in strategy at the company to focus on more consumer-oriented services. RushCard, which had previously been working to build a new processing system, would focus on offering more “virtual banking” services such as credit and loans, he said.
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“What I really want to build is a company that creates all the services that our consumer group needs,” Simmons said in a phone interview.
Simmons said the new services the company will introduce include an option RushCard plans to roll out over the next several weeks that gives card-holders the ability to temporarily freeze access to their accounts if they worry their card was lost or stolen. He said he is open to researching new credit scoring models that might make it easier for people to qualify for mortgages based on payments that aren’t traditionally factored into their credit score, such as a rent payment. He also said the company would look into services that appeal to “affluent” customers who want to do more of their banking online.
In October, RushCard faced an outage that left thousands of customers without access to their accounts for days. The technical issues came up as the card company transferred to a new payments processor. Some customers said the glitch caused them to fall behind on bills, and Simmons, along with former chief executive Savard, vowed to make customers whole. In May, UniRush agreed to pay $19 million to settle a class action suit with customers who faced fees and other costs they encountered as a result of the card glitch.
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Simmons said he spoke to “hundreds” of customers affected and that hearing their experiences encouraged him to take a more consumer-oriented approach. “I got back to how am I going to help the customer,” Simmons said.
The changes at RushCard come at a time when the prepaid market is facing more scrutiny from lawmakers and regulators. Last month, senators Sherrod Brown (D-Ohio) and Bob Menendez (D-N.J.) sent a letter to Walmart, MasterCard and the prepaid company Green Dot, asking them to explain an outage in May that allegedly left thousands of customers unable to access their money on their Walmart MoneyCard prepaid debit cards. The senators asked for details on how many customers were affected and what the companies would do to compensate those customers.
And the Consumer Financial Protection Bureau proposed rules for regulating the prepaid card industry in November 2014 that would make it easier for consumers to resolve errors and increase fraud protection for cards that are lost or stolen. A final version of the rules is expected this summer.
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