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A major consumer watchdog is investigating the RushCard fiasco

A major consumer watchdog is investigating the RushCard fiasco

The Consumer Financial Protection Bureau said in a statement Friday it will use "all appropriate tools at our disposal" to get to the bottom of the snafu that left thousands of RushCard customers without access to their funds for nearly two weeks in October. 

In the statement, CFPB Director Richard Cordray said he has personally spoken with executives at RushCard parent company UniRush, a privately-held financial services company founded by music mogul Russell Simmons in 2003.

The agency "will make sure that action is being taken to address harm that has occurred, the harm that may still be occurring, and the cascading financial effects of consumers not having access to their funds for more than a week," Cordray said. The CFPB is working with fellow consumer watchdogs the Office of the Comptroller of the Currency and the Federal Trade Commission to "hold accountable all parties involved and to make consumers whole."

UniRush CEO Rick Savard issued a statement Thursday saying the software glitch that emptied thousands of RushCard customers' accounts had been largely fixed. However, customers continue to complain on the company's social media pages about missing funds and inaccurate deposits. Some have had to pay upwards of $30 to receive a replacement card (the fee charged for expedited shipping). Yahoo Finance spoke with several customers about their experience this week.

Jasmine Jackson, 26, a single mother of two from Beverly, N.J., said Friday afternoon she is still missing a $4,000 student loan refund that was supposed to be deposited, as well as a refund from a moving service. She had just moved into a new apartment when her RushCard balance suddenly turned to zero Oct. 10.

“You can’t just take people’s money,” Jackson said. “People are out here hurting.

Marlene Taylor, 44, of Delaware said she is missing a paycheck that should have been directly deposited into her RushCard account on Friday, a day after the company said most of the issues had been resolved. "I don't know what to do," Taylor said. "I've been trying to contact the company but ... the phone mysteriously hangs up."

Since the CFPB was founded in the wake of the financial crisis, it has recovered more than $10.8 billion in financial relief for consumers harmed by credit card companies, payday lenders, banks, mortgage companies, debt collectors, and many more.

RushCard

What's next for RushCard customers?

Cancel direct deposits. If you are a RushCard customer, cancel any direct deposits you have going to your RushCard account until the situation is cleared up.

Look for alternative banking tools. Customers looking for prepaid debit card alternatives to the RushCard can start by researching fees on sites like NerdWallet or Bankrate. MagnifyMoney CEO Nick Clements recommends two prepaid card alternatives — Bluebird from American Express and Serve by American Express. Bluebird has no monthly fee, no usage fees and fee-free in-network ATMs. "The other nice benefit is that you can deposit cash at the cash register at Walmart stores," he says. Serve's $1 monthly fee is waived with direct deposits of more than $500 per month.

Look for fee-free checking accounts like Capital One 360, Ally or at local banks or credit unions.

Bad banking history? Try 'second chance accounts'. Two national banks, Green Dot, offered by Walmart, and Wells Fargo, offer their version of a “second chance bank account.” These accounts, which might be listed under a name like “opportunity checking,” are offered by a number of regional and local banks as well (here’s a comprehensive list from Nerdwallet). Kind of like a secured credit card, which helps people rebuild their credit histories, second chance accounts help customers build up their bank history.

File a complaint. Affected consumers can file complaints against RushCard with the Consumer Financial Protection Bureau (submit one here) or call toll-free at 855-411-2372. Reach RushCard customer service at community@rushcard.com or agent@rushcard.com.

Are you experiencing issues with your RushCard? We'd like to hear from you.

Mandi Woodruff is a reporter for Yahoo Finance and host of Brown Ambition, a weekly podcast about career and finance. Follow her on Tumblr or Facebook