Class Action Lawsuit Filed After RushCard Update Fiasco

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A class action lawsuit was filed against the pre-paid Visa card companies that run RushCards over a problem with an update to the system that left users without access to funds for multiple days.

Lead plaintiffs allege in their class action lawsuit that RushCards, founded by hip-hop legend Russell Simmons and issued by Metabank, effectively locked them and other poor and working class families out of their accounts in October of this year and that some users are still unable to access their money.

The RushCard class action lawsuit further alleges that when the plaintiffs were finally able to access their money, they found discrepancies in their account balances and found that they had been charged ATM fees for failed transactions while they were locked out. Additionally, according to the plaintiffs, some users’ entire account balances were wiped out.

“During the time the system was down, RushCard customers did not have access to their funds, causing immense hardship, including the inability to pay for basic necessities such as food, rent, electricity and gas,” alleged the plaintiffs in their RushCard class action lawsuit. “Additionally,” they continue, “customers were unable to pay their household bills, resulting in late fees being accessed.”

The plaintiffs acknowledge in their class action lawsuit that RushCard’s agreement includes a clause that would require them to arbitrate their complaints individually outside of court, but they argue this clause should not be enforced in this case. “Section 30 of the RushCard Cardholder Agreement purports to require that certain disputes be individually arbitrated. Section 30 is unenforceable because it is substantively and procedurally unconscionable and/or is against public policy,” say the plaintiffs in their RushCard class action lawsuit.

“[S]uch a purported arbitration agreement is void and unenforceable,” continue the plaintiffs.

The Consumer Financial Protection Bureau (CFPB) issued a statement in October indicating they are investigating the situation. “[T]he CFPB is prepared to use all appropriate tools at our disposal to help ensure that consumers obtain the relief that they deserve,” said the director of the CFPB.

According to the class action lawsuit, prepaid cards help low- and moderate-income Americans who are not able to use the banking system. The plaintiffs seek to represent a nationwide Class of “All consumers in the United States who held a RushCard and were denied access to their accounts and funds beginning October 12, 2015.” They also seek to represent a subclass of Georgia residents and Florida residents.

The plaintiffs are seeking damages from the companies that issue RushCard, including actual damages from the loss of funds, along with an order requiring RushCards to disgorge all profits from the update fiasco. The plaintiffs accuse RushCard of negligence, fraud and misrepresentation among other things, as well as violations of various state laws.

The lead plaintiffs are represented by Domenico Minerva, Peter Safirstein and John A. Yanchunis of Morgan & Morgan Complex Litigation Group and Jean Sutton Martin of the Law Office of Jean Sutton Martin PLLC.

The RushCard Update Fiasco Class Action Lawsuit is Fuentes, et al. v. UniRush LLC, Case No. 1:15-cv-08372, in the U.S. District Court for the Southern District of New York.

UPDATE: On May 10, 2016, the makers of the RushCard have reportedly agreed to settle this class action lawsuit for $20.5 million.

UPDATE 2: The RushCard Prepaid Debit Card Class Action Settlement is now open! Click here to file a Claim Form! 

UPDATE 3: On Dec. 27, 2016, Top Class Actions readers who filed valid claims for the RushCard class action settlement began receiving checks worth as much as $100! Congratulations to all our viewers who got PAID!