Phat Fraud? Russell Simmons’ Prepaid Credit Card Investigated For Hidden Fees
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!
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I had a Baby Phat card in high school, and it charged me a dollar for every purchase I made with it. I wouldn’t suggest them to my worst enemy!
The irony is that people use prepaid credit cards because they have bad credit, yet the card doesn’t really operate as a credit builder/repairer. I shake my head at the rush to use prepaid credit cards because it proves that people don’t know anything about finances. It’s safer, cheaper, and wiser for your credit to establish a secured credit card–that is, take about $1000 and have your bank attach that “credit line” to a card, and as you spend, you pay off the monthly balance as though it were a regular credit card. I’m not going to shame Russell Simmons or the Kardashians, or any celebrity who puts their endorsement on these prepaid credit cards, but black folks in particular should be told they’re being bamboozled by the smiling, grinning (cooning!) faces major credit corporations know will attract the financially unsavvy and the irresponsible spenders.
-Gigi
I am stunned that there are 60 million using the Rushcard, no wonder he is always smiling!
You and I are on the same wavelength, many people do not take the time to develop some discipline and do the research. All of the cards, will cost you more than a free checking account with a debit visa/mastercard attached to it!!!!
The secured card or getting one from a credit union are the best ways to combat bad credit and perhaps taking a money management course. You better manage your money or , your money is going to manage you!
I have have been using the Rush Card for about 4 years and I have not had any type of problem with them and my money. I Chose to have a pre paid card because traditional banks are a Rip Off within themselves and the pre paid card is much easier to manage. I dont have the time or patients to jot down every penny i spend! If you dont have it, you cant overdraft. I highly suggest the Rush Card over any financial institution! The fee’s are clearly explained in detail if you just ask and they are also available online if you just look!!
I had a Rush Card and I never actually used it. I have a prepaid credit card through Green Dot, and I rarely use it unless I’m doing holiday/online shopping. I keep my *real* money tied to my bank account only.
I could tell by that cheap ass commerical that his card was bust. If you can’t pay for a decent commercial to lend your product some credibility, then I am not interested.
I have always looked at Russel Simmons as an opportunist and exploiter. Instead of encouraging blacks to get IDs (which a shocking number of black Americans don’t have), get bank accounts, build and maintain good credit, he creates these cards under the guise of helping disenfranchised people. In actually he’s just helping himself get richer off the pathology and disfunction of these people.
the monthly fee they charge is more than the monthly fee you would pay to a bank. you don’t have to have good credit to have a bank account.. you just can’t be on chexsystems.
consumers can opt for a secured credit card w/no fees instead of a prepaid card. w/a secured card you are using your own money and it helps build your credit.
if ppl got direct deposit that would cancel out the monthly fee that the bank charges you.. these ppl are better off going to the check cashing spot..
It is time somebody said it. Blace folks you need to read, read, read. Have you not learned, anybody, anybody offering you something is seeking to make a dollar at your expense. From the mortgage crises you should know they don’t give a damn about you, your children or family. Nevertheless about your credit rating
They are like green eyed demons, when they see green, it is like life saving blood too a leach.
60 million customers! WOW!
60,000,000 X $1each = $60,000,000 and that is ONE MONTH.
$60,000,000 X 12 months =$720,000,000. Go open your own bank, ok.
Please let me know if an organization can purchase your credit card. Also I need the contact information (phone number and address).
William Casey
510-230-1974
Have spoken to an attorney about a class suit they never disclose to the 1.00 fees per transaction