By all accounts, the past month has been the worst in RushCard history, the pre-paid debit card company founded by Hip Hop pioneer, Russell Simmons. The company’s planned migration (October 12) to a new transaction processing company failed dramatically, causing a system wide outage, preventing thousands of RushCard holders from accessing their funds. Users bombarded Simmons’ social media accounts with stories of personal carnage experienced during the calamity. While Simmons did release a series of videos updating customers on the cause of the fallout throughout the week (something most financial services executives rarely, if ever are willing to do), as well as frequent statements through the RushCard website, Facebook page and Twitter account, all of that was lost in a sea of fury.

“If you go to Facebook and go to RushCard’s or Russell Simmons’ page you will see that there are a million on us suffering,” Nicole Blackshear of Dayton, Ohio told HipHopDX in an exclusive statement (October 14). “They keep lying on their Facebook page that the system is back up, and it’s not. People are being evicted, can’t get to work because they can’t get gas. People are needing milk and pampers for their children. People’s utilities have been disconnected. There is so much pain and suffering and no explanation.”      

In the three weeks since, UniRush has launched an internal investigation into the migration. The company is now the subject of class action lawsuit in New York State. Federal regulators are looking into the issue. The Consumer’s Union removed RushCard’s prized gold star for service.

“It was one of the most devastating times in my adult life,” says Russell Simmons in this exclusive conversation with HipHopDX. “I know how hard people work to get money. I know how damaging it could be if people were not able to get to their money… I’m deeply sorry. I don’t know what else to do about it but try to make good on it and try to make the people that were damaged whole. That’s all I can do.”

Simmons details the challenges the company faced during the outage and his plan to create a fund designed to repay customers who incurred damages. He’s also offering free service to current RushCard holders through February 29, 2016, which he says will cost the company all profits for the next year. The pre-paid debit card industry didn’t exist until Simmons identified an opportunity to give people squeezed out of the banking system access to modern financial services. Since its inception in 2003, the company has been levied with claims that it exploits impoverished communities. Here, Uncle Rush clears the confusion.

How RushCard Failed

HipHopDX: Recently there was an issue with UniRush’s transaction processor. People were unable to access their RushCard funds when needed. How did this happen? Why did this happen?

Russell Simmons: It was one of the most devastating times in my adult life. I know how hard people work to get money. I know how damaging it could be if people were not able to get to their money. It’s true that we built almost a virtual bank. We built a company that people relied on for everything, from automatic bill pay to early direct deposit to transferring money to family members. We know that this was a very big thing. When transferring processors, we had a crash. That crash set off a tsunami, so a lot of things happened as a result of it. We had hundreds of people working on it and it’s just now over the last two weeks back to normal as far as the services we offer. Every single person gets their direct deposit two days early. A lot of the services we had—the card-to-card transfer—all of these things are back in order. Now I have the rebuilding process to restore trust from the community and paying back people who were damaged. I’ve announced that we’re creating a multimillion dollar fund that will be used just to pay people who didn’t get their money. We’ve given some people money just for the outage. But then the people who make additional claims because they lost their apartment or because they lost their job or because they couldn’t get their medicine—there will be claims from people that were damaged. We’re putting a fund together that will help to make people whole. That’s our job. That’s one of the many things we have to do to regain trust.

I want to talk a little bit about the card in general. When we created the card, when people got their checks they went to the check cashing place. They paid more then, at that moment, than they paid in our whole monthly fee to cash their check. Then they got in a line and spent an average of eight to 12 hours just paying their bills. Now with the card and access to the American economic system because you need plastic, they can pay their bills online. It gave people dignity and access. A few years into that process, JP Morgan came out with a report that said not only people who could not use banks—which was 50 million Americans—but a lot of middle class Americans would be better off using the kind of service we created. So now we have a lot of millennials and middle class people and others who manage their children in college by giving them a card or who transfer money to family members in other countries or who just want their check two days early. No bank will ever give you your money on Wednesday when it’s due on Friday. We do that. We don’t charge anything for that. I built this company as a service. And I built this industry. There are many competitors. Many. And those competitors do not have a gold star. We lost our gold star. The consumer unions and others chose us not only being amongst the cheapest, but the best functioning company in our space. We’ve won awards and have been in an award winning category in our space for years. We lost that. We’ll gain it back. In fact, I don’t plan to gain it back. I plan on being much better. By focusing on this again, I remember the original breakdown. All of the innovation that is card-to-card transfer or prescription discount for drugs or check capturing or the minute we brought in free ATMs—which we have in 25,000 locations, either we invented those processes or we early adopted the ideas.

I still have ideas that I have to implement. I want people to pay their rent regularly to be able to get credit for that to improve their credit. It’s been a long fight for me to be able to make FICO and other credit people accept that if somebody pays their rent for eight years then they should be able to pay their mortgage. If somebody pays their phone bill without service past due, it should be added to their credit so they can be able to buy a car. These things other innovation have to get done. So that’s why I was leaving processors in the first place because our new processor will enable us to do some of the things we want to do creatively.

I answer this to Rhymefest with all respect due, a lot of people criticize what we do. We work on a very, very small margin. Let me give you an example: The funds that we created will pay for everybody’s free usage of RushCard between now and March. Between now and February 29, there will be no fees. This cost is more than all the profit we were going to make in a year. It’s also more than any profit we’ve earned in the subsequent 12 years we’ve been in business. I’m giving away free service and it’ll cost me more than anything I might ever make. I might make more money, but I’ve never made more money than I’m giving away just by having those hundreds of people go to work everyday and all the managers and hundreds of other call center people, all those people I’ve got to pay for for the four months and then I’ve got the free holiday, then the money to pay the people that might’ve been damaged. That’s going to be very expensive.

I want to be the best in this business. I invented it. If people say that I’m the Godfather of Hip Hop or put poetry on the stage or everything I did for comedy or that I put a reverend on TV after the Osbournes, I guess that’s kind of creative. It ain’t have nothing to do with inventing an industry. I didn’t invent rap. I just worked for it. I didn’t invent poetry. I just worked for it. I invented this industry that MasterCard and Visa and Carlyle Group and Bank Of America—I invented this industry. I keep saying it because people think I put my name on a card. I did something because I saw people standing in a corner waiting for check cashing and they could never get a bank account and I gave them a card so they had plastic. And then immediately after that within a few years, we had direct deposit. There’s people that had jobs that used to get their money sent to them. A few years later we said, “Wait a minute, if we get their money on Wednesday night, why don’t we give it to them on Wednesday night?” So we started posting their money the minute we got it or the minute we knew it was coming. We knew the money was in the mail and we gave it to the people. That early direct deposit has kept a lot of people out of check cashing places. In defense of what I do, I’m a business yogi. I don’t need money. I got a Range Rover. I’m comfortable. I don’t need shit. I don’t need a Bugatti or whatever the fuck they’ve got. I don’t need none of that. I run five charities. I go to work everyday. I may tell some jokes ya’ll might not like or think are a little dirty; I may make records people think are a little dirty. It makes me laugh. I like it. I like and use whatever I give to the world. I have a RushCard in my pocket. I really believe that not only is it already helping the middle class in ways that people can’t even imagine, it’s going to be even better because I do want to give people better access to health care, better access to prescription drugs. I want to give them credit for what they do. I want to give them discounts where every week you’ll know what discounts you can get. If I go buy Tide, I’m going to get 30% off. The card will have many functions on it. That’s why I moved it to another processor.

My answer as far as exploiting the black community, I’ve never exploited any community. When I see these guys at the march or when I see these guys changing laws, when I see these critics showing up with me and the community doing things, then I can respect their criticism. I respect everyone, but I’m not in the business of exploiting nobody. If you look at the Consumer’s Union, you can’t buy them. The Consumer’s Union is the biggest and most powerful of all. They cannot be bought. There’s no advertisers, no nothing. I have their gold star. I was among their top three. And again, they look at these five companies out of a thousand and we’re #3, it’s hard to be better than #3 because if I’m giving you card-to-card transfer for $0.99 and you care about that and they’re not, or if I’m giving you free card center service and their not, and I’m giving you a price of $5.99 and they’re $4.99 but then they tag you for certain other services—there are so many things that go into the cost of the charges—so if you’re in the top five, the difference between you and #1 is $1 a month. Again the question is do we do a good job? We’ve always done a competitive job until now. And we’ve been through hell. And I’m going to rebuild it. But the idea that I exploit the community, it really hurts my heart to hear it because I work everyday to improve the community.

Accusations That Rush Card Exploits Poor Communities

DX: When this was first taking place, it didn’t seem like you really knew how long it was going to take for the issue to be resolved, either. The first announcement acknowledged that you wouldn’t be able to deliver funds as scheduled. Then there was another announcement pushing it back farther.

Russell Simmons: Let me address that. First of all, it was a tsunami. Instead of getting 6,000 calls a day, we were getting 400,000 calls. With any processor transfer, there are little things that come up. Those little things were fixed immediately because you can understand the chatter amongst your call center and the pocket of people whose cards aren’t working properly. When the tsunami came it was of such magnitude and all we could do was fix it. Imagine if 100,000 people couldn’t get access, it might’ve been 30,000 or 20,000 people after. But you know what the 2,000 people, which was a week later, 2,000 angry people on Instagram—who have every right to be angry and I have every right to be breaking my neck to try to fix them one-by-one. A lot of experiences were unique. Some money went back to the employer. When your money’s not delivered to the people and it goes back to the employer then people don’t know how to find their money. Some money was part of card-to-card transfer. We had to turn off card-to-card transfer when it happened because we had to protect the consumer. We had so many things that because of the first tsunami that broke down, including our ability to respond to customers who had regular issues. A lot of people called. So when we were down to 20,000 people [who still had issues] those 20,000 people might call 80,000 times because they had a right to. And then other people are calling just to see if their check was coming. And in fact, their check was coming. Overall, those 80,000 people’s checks were coming, but they wanted to call to make sure. So then the call centers were experiencing the craziest overages. It’s just calming down. People have gotten their last check or last two checks. Everything is back in place. We are damaged. We’re not going to blame anybody publicly yet because we don’t think it’s really productive. But I want to take my company and make it best in its class as it has been amongst its class and I want to create services that no one seems to know that our community needs. That’s the most important thing. We’ve created services that no one cared if it was needed or not. We’ve serviced customers that no one cared existed at all. We created a business out of something that no one even imagined could be a business servicing these people. At the time [in 2003], there were 50 million Americans, a lot of them black and brown, who could not get a bank account. There’s another 100 million who the banks didn’t give a fuck about. And those people, their overages were [extreme]. I want to build overdraft protection which will cost next to nothing. I want to build a lot of different things to go with what we’ve built. Again, we created this industry. We either created or were early adopters of all the things that help the community and I want to continue to do that. I’d like to do it with people with knowledge of what it is that we do. When they don’t know what we do, they blame us. There’s one guy in particular who built his career attacking me. He wasn’t attacking MasterCard or Visa. I’m the only black guy in banking and I got the gold standard. All of these people are helping to build a financial services institution for people who needed it. No one identified them before me and no one is going to be as innovative as me. I still have the same mission. I’m still going to work on it.

The idea that people want to investigate me is fine by me. Sometimes it will take a lot of the legal team and a lot of the people whose job it is to make sure we’re building other stuff, so I’m trying to respond to them as quickly as possible. I want them to reveal what they learned in any investigation. I welcome it. I’m the first person who wants to investigate corporations. Remember, I’m an Occupy Wall Street guy. I was at Occupy Wall Street everyday. I don’t think companies should be allowed to operate without being investigated or without having small margins or reasonable margins or without exploiting the people. That’s been my whole life’s work. It’s not like I have a history supporting the prison industrial complex. I try to dismantle it. I don’t invest in things that exploit the people. I try to dismantle things. I didn’t occupy Wall Street to try to destroy Goldman Sachs. I spoke to Goldman Sachs yesterday. I just want the world to be fair. When I went to Washington D.C. to lobby about these cards, I have a company that’s bank debt is less than $10 billion. But at the time, any bank over $10 billion was going to be charged a fee that retailers paid to cards. If that had happened, that would’ve been charged back to the people and then all the people using this kind of service would be paying higher fees. I was the only one in the industry exempt from that because I happened to be working with a smaller bank at the time. I’m not saying I’m an angel. I’m not enlightened, but I’ve got to sleep at night. I do things that help people and the RushCard certainly changed a lot of people’s lives for the better. I want to make things even better. That’s my answer to Rhymefest. If he spoke to me and heard what I do and understood a little better, he wouldn’t say that I exploit my people. I respect him. I say things everyday that get me in trouble and I don’t mind saying them because I love the community. But I’m just responding to him because I want people to know my attention for 11 and a half years, and again, I created a service industry that a lot of people’s lives were changed because of it.

DX: If I’m not mistaken, Rush Card switched transaction processing companies from TSYS to MasterCard in 2014. Is that the company that we’re talking about?

Russell Simmons: We switched in 2015. It just happened. TSYS switched to MasterCard the moment the outage happened. It was during the transfer from one processor to another that the outage happened. I’m not accusing anybody at this time. I don’t need to. All I care about is making the people whole. I have millions of dollars to give away on that end and I’m spending millions of dollars trying to hold the company together and also give people a break because the majority of the people were out for two days. The majority of the people didn’t get their money on Wednesday. The majority of those people did get their money on Friday. And then it stagnated—few people here, pockets of people there. Frankly, it was a nightmare and it happened because of the volumes of calls, our website crashed, everything. It wasn’t that we didn’t have a stable website. It wasn’t that we didn’t have good customer service history. No one could ever imagine a hundred thousand people not getting their money. We’ve never heard of that. It’s not possible. So it was a tsunami as I said, and it had a lot of effects that, until recently, were not fixed.

Again, people are saying that you can’t access your money or that if you try to use your card so many times and it doesn’t work, the card will then register as not active, so you have to put a new password in. So if you can’t get to customer service then you don’t know how to put your password in. There were a number of reasons, small reasons, why certain things didn’t work for some people. Again, if you know that 200 people are mad at you on Instagram, it’s like 2 billion people. If 2,000 people are mad it’s like oh my god. We brought the numbers down very quickly, but any one person who can’t get their money is damaging. I called people individually. I called a lot of people and I spoke to them. One woman said, “I can’t get my money, so I couldn’t get my medicine. I couldn’t get my medicine, so I went to the hospital.” I gave her her money and I gave her some more money on top of that. She was so thankful that I wanted to cry, like, “Why you ain’t you curse me out or something?” She was so nice to me. I called a lot of people and I heard these stories and I said I’m going to have to get a fund to help these people. The people that lost their apartment because they didn’t get their rent on time, or whatever. There’s going to be a list of those people that will be processed within the next few days. There will be an easy way to submit a form. We’re not going to be that tight. We’re going to require some proof. Obviously we’re not going to make it a free-for-all. If you have a card, if you have this history and if you had this experience, we’re going to easily match it up to what your experience is and we’ll give you your money. That’s what I want to do. I don’t think any corporation would do that. I don’t know what else to say except be honest, try to do a good job and try to be honorable. To me, what’s more damaging than anything is that if I can’t get people to march to make the government change the laws in New York State like we did recently, or if I can’t be a part of the organizing committee of the Million Man March or if I can’t be part of my animal rights causes or fighting poverty, then I lose everything. That’s what I care about. That damage to my reputation is only for the value of helping others. My company hurt people and I want to be responsible and steer them—the people in my multibillion dollar company who are not being blamed—and do something unprecedented regarding making people whole. That’s all I can do.

DX: I don’t know if people understand how rare these network wide outages are in the financial services space. This is something that doesn’t happen very often. Is foul play something you’ve considered?

Russell Simmons: A lot of people have said that. I haven’t seen any foul play. We’re doing an investigation on how it happened. It was in a transfer of files from one processor to another and us in the middle. It was during the transfer that the outage happened. One of the reasons I welcome the regulators looking is that they’re going to start blowing the whistle on everybody involved. I don’t mind taking the brick because I can help the people. People are like, “What about that black business?” Yeah, what about it. Then I’m there, I’m one of the only black person in the building. I try to hire as many black people as I can. But the truth is, we should not hate ourselves enough to say that, especially when we created a business that all the other bankers are borrowing and we’re doing it better than them. My overall perspective on what we do is better than them. We care about our community more than them. I don’t know any of the banks that invested in the Million Man March but me. RushCard invests back into the community in places that no other bank would invest. I don’t know any bank that invests in Minister Farrakhan. This is the kind of precedent that we set. Again, giving people their money two days early, me figuring how technology could work and how we could be fairly safe in doing it, is an amazing thing. It kept people out of check cashing places and that is an amazing endeavor. Card-to-card transfer, I remember I went into a soul food restaurant and I met a lady in her 80s. She told me that she does card-to-card transfer and it changed her life. She used to have to drive a long way to Western Union and it cost her a fortune. Now we’ve got it for $0.99 and she’s getting her money on her card. It made me feel good. There are a lot of things coming. I still want to do what we’re doing. I don’t want out of the business. I want to make it better. Not that I care about legacy at all, but if there is a legacy for my kids to care about, I don’t want them to think that I was a greedy banker. I don’t give a fuck about money and they know me. I don’t care about money like that. Of course when you got it, it’s easy to say you don’t care about it, but I don’t really need nothing. I’m not needy like that. I don’t need a new car, I don’t need new jewelry. I don’t buy none of that shit. All I do is run five charities.

Russell Simmons: “I’m Deeply Sorry”

DX: What do you consider a small margin? I know you’re prepared to lose next year’s profit. You mentioned you’re operating at a small margin.

Russell Simmons: We make very little per customer. Margins average about 10% with ups and downs over the years. When we give away this free service, it’ll be more than anything we’ve ever made in a given year. Here’s how small of a margin that is, Chase Manhattan got into our business and they gave away 25,000 free ATMs. We matched them by giving away 25,000 free ATMs in the hood. Guess what happened. They looked at that shit and they quit. They got out of the business. So it’s a very small margin and almost anybody you can name that got into the business, any celebrity, they [couldn’t survive]. Even Suze Orman.

The last thing I want to say about the free cards [provided by other banks]. Nobody’s free. If you have $5,000 in your checking account, you can have it. And even then it doesn’t have to be free. People should ask when they say free, how is it possible when they have 5,000 people working and they don’t charge the customer anything? We’re going to find more ways by giving discounts and giving other stuff. Maybe we can make a margin. But we’re doing everything we can to lower the price all the time. 

DX:  How much testing time did UniRush spend before moving forward with the migration?

Russell Simmons: That’s a sophisticated question. I legally cannot comment on that. I think companies that sell things to underserved communities should do things to support underserved communities and that I should do things that the community needs because the company is based on the community. I know that there are lots of people in lots of places besides our community that use our card. I don’t know what the percentages are. We don’t have all that data, but I can tell you that the company cares about the concerns of minorities because the great percentage of our people are minorities and we attract a lot of minorities because of the branding that we do. We built our company with visuals. A lot of companies didn’t do that. They just put it at retail and hoped somebody bought it. We actually used BET. We used CMT.

There will be a lot of investigations and again, I welcome them because I’d like for it to be shared. I also believe that it’s one of the things that I’ve done that I was legitimately a pioneer of as opposed to being an innovator. I just happened to be at the right age and came to Hollywood and make some records. I made [“Christmas In Hollis.”] It might’ve been one of the first records, but “Rappers Delight” came out first. I was there. I watched it. I didn’t make it. This, I really did. I feel like I’ve been catching [flack]. For many years, people have said my credit card charges too much interest. I was at Occupy Wall Street and a woman yelled at me about the exploitation of the community. Try being a year before we started that company and still people who don’t understand what we do go to check cashing places and try to operate in this world where you need plastics and banks don’t accept you. Or try working with a bank in a scenario where you don’t make that much money and they try to figure out how they can get a return. It costs them a lot to manage each customer. They have to find a way to make that money off each customer or somehow purge them. Virtual banks are cheaper to operate and it’s the way of the future. I just happened to be at the forefront of a new industry. What happened [with the outage], I don’t even know how to apologize to a lot of the people who didn’t get their money for days at a time. For the majority of the people it was only a few days, but even a few days is forever. I understand because I spoke to enough people, even if people don’t believe it. I spent a lot of time in the community. I spoke with a lot of people. I have family members that use the card. I have lots of connections in my communities around this country. I know how devastating it was to some people. I’m deeply sorry. I don’t know what else to do about it but try to make good on it and try to make the people that were damaged whole. That’s all I can do.