Russell Simmons is being called a “fraud” in a new class action lawsuit over his RushCard company’s latest failure, leaving thousands of cardholders without their funds.
The lawsuit, obtained by the Daily Mail, accuses the 58-year-old hip-hop mogul’s Rush Communications, UniRush and Meta Financial Group, Inc. of breach of contract and is seeking unspecified damages and restitution.
Earlier this month, customers were unable to access their money from the prepaid debit cards due to a mishap caused by what Simmons described as a tech change. Some say it caused them to have to choose between feeding their children or paying their bills. One even said they were in jeopardy of being evicted for not paying rent.
But it’s not just a lawsuit Simmons has a to worry about. His company is also being investigated by the Consumer Financial Protection Bureau, a financial watchdog.
Simmons launched RushCard in 2003, allowing those with lower income, who typically do not qualify for traditional banking services, to utilize financial management tools such as electronic pay and payroll direct deposit.
Though Simmons and his company promised the problem would be fixed, thousands say they continue to be without their funds, while others say they raked up fees due to failed ATM withdrawals they made under the impression their money was present in their accounts.
“Plaintiff's and class members were fraudulently induced into purchasing RushCards and depositing money into their RushCard accounts because they were led to believe their funds would be 'safe and protected' with unhindered access to these monies,” the lawsuit says.
They are suing for negligence, fraud, breach of contract and violation of the New York deceptive acts and practices law.