Thursday, June 24, 2010

News: Russell Simmons Wins Exemption on Debit-Card Fee, Perhaps At Detriment To Minorities

We all know Russell is thee man who laid the blueprint for modern day Hip-Hop moguls like Diddy and 50, but recently it was brought to light that Simmons; the founder of one of the game's most iconic rap labels (among other memorable business ventures), might just be more shrewd a businessman than any of us ever could've imagined.

In an eyebrow-raising piece on Bloomberg Businessweek's website, Robert Schmidt and Patrick O’Connor outline Simmons' recent court victory when a judge decided to allow his company UniRush to cap a interchange fee on the RushCard; a prepaid Visa debit card that the company offers to people who don't have bank accounts and can't qualify for credit cards AKA the infomercial we've seen a thousand times at 2 AM.

The article basically outlines how capping this interchange fee (the 1 to 2% service charge when you use a debit card that usually is billed to your bank) puts more financial strain on the RushCard holders, who, you guessed it, turn out to be primarily low income minorities.

Exploitative? Maybe...further reading is def. in your best interest, especially if you've been thinking about grabbing yaself a RushCard, I'll admit that I thought about it for a hot second.


Unmentioned are the fees Simmons’s company imposes for its card, including a $9.95 monthly charge, $3 for activation, $1 for every purchase if a PIN is used, $1 for online bill paying, and 50¢ to check the balance at an ATM. Direct deposits and online account management are free, as is a service that alerts customers when their balances are low.

By comparison, check-cashing services can charge $50 to cash a $1,000 paycheck. Such fees have led some to ask whether Simmons is at least as interested in doing well as in doing good. Simmons is “marketing a product that is frankly exploitative of the poor and minorities,” says Adam Levitin, a law professor at Georgetown University in Washington who specializes in banking issues. “He’s no different than a bank

Read the rest here

1 comment:

JBCat said...

I like the Russell Simmons Rush Card find read my review.