Russell Simmons Responds to Dr. Boyce’s Critique on the Rushcard

 

To the YourBlackWorld family:  Some of you saw my recent critique of the RushCard, the new prepaid debit card issued by Russell Simmons.  Some took my article about the RushCard and interview about the Rushcard on BBC World news and The New York Times to imply that I have serious problems with the way Russell Simmons does business.  While I do not feel that Russell, nor anyone else, is above being critiqued by the Black community, it should be made clear that I respect much of Simmons’ work, especially what he has done to reduce the severity of the drug laws that incarcerate so many Black men across America. 

I must admit that I’ve been disturbed by the recent trend of African American urban role models lending themselves out to companies such as Rent-a-Center to encourage people of color to participate in arguably one-sided financial transactions.  But I must be clear when I say that the RushCard is not necessarily a bad deal for those who need it.  My greatest challenge to President Obama is to find ways to ensure that all Americans have access to basic services, such as bank accounts, so they are not forced to pay high fees in order to access their own money.  I cannot endorse an argument which states that Russell is necessarily a philanthropist (as his ads claim) because his company provides an option that improves upon the horrific options already in place.  So, while I agree 100% that the RushCard is better than check cashing venues in the Black community, my greatest concern is that many members of the urban poor are still paying the high cost of poverty in America.  It is my hope that Russell sincerely fulfills his role as philanthropist, leader and financial enabler by genuinely working to solve critical liquidity and financial literacy problems in urban America.  I have complete faith that he can accomplish whatever he puts his mind to.

So, out of fairness to Russell, I want all of you to see his response to the New York Times piece, which is written below.  My goal is not to think for you, it’s to encourage you to think for yourself.

 

From Russell Simmons, CEO- Rush Communications:

Since April is financial literacy month I feel this is a perfect time to set the record straight concerning comments I have been reading online about the RushCard.

Although a recent NY Times article was not judgemental about the RushCard, I'm disappointed that they did not do any research when quoting critics who say the RushCard pushes people into debt.  The RushCard is a prepaid card, NOT a credit card.  It gives people the convenience of a credit card without the debt.  Financial literacy month is when people should know the truth about options to manage their money, not when misinformation should be spread to keep the underserved communities suppressed.

I have watched with pride the way it has changed the lives of hundreds of thousands of people giving them respect and dignity.  It gives underserved communities the tools to get their money right.

The RushCard helps struggling Americans who find themselves without access to bank accounts or credit.  They have to tackle difficult and expensive obstacles every day when they need to pay their bills. When they go to a check cashing place they are forced to pay a huge fee just to get their money.  10% of their paycheck goes to these fees and they spend 8 to 10 hours a week to go pay bills in person. They cannot pay bills without standing in line, rent a car or shop online.  This separates them from part of the American Dream that other Americans are free to enjoy.

Some people pay a lot to have a bank account.  The average US household pays over $340 a year in bank insufficient fund fees.  In fact, most of these are paid by members of underserved communities totaling over $1,300 per year per household.  I have read that we are somehow trying to take advantage of people by charging high fees.  It's a very competitive space and even Walmart, the largest retailer in the world, has followed us with their own prepaid card.

We've built many innovative tools to help people save money.  Over half of the RushCard members who use these tools say they save more than $300 a year. 30% say they're saving $600/year.  And we're constantly adding new features to help people.

I needed to do something to help the underserved.  It had to be an entrepreneurial venture to make it grow fast enough.  In five years we have over 1.5 million members and the biggest source of new members is from current members talking about the card.  The people who need the card and use it really understand its value.  Our biggest advertiser are the users themselves, spreading its value by word of mouth to their friends and family members.

In short, I have no interest in building companies that don't have empowerment components for communities in need.  The focus of all my businesses will always be to serve.  Scripture says, "do not forget the poor" so I will always make it my job to help relieve the suffering of others whenever possible.  I am thrilled to see the RushCard is doing just that.

I invite critics to come and compete with RushCard and Walmart in this space. This will help us all find better solutions for the underserved communities.

-Russell Simmons

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