Since the dawn of digital retail, service outages have been regrettable but not quite catastrophic incidents for companies. However, as consumers continue to invest more and more of their personal lives in the smooth and reliable operation of online platforms, even a few hours of spotty performance can cost big.
Case in point: Music mogul Russell Simmons' prepaid RushCard is now on the hook for $19 million in fines.
That's the word from The Washington Post, which reported on the settlement that RushCard agreed to in a decision that closes out a lawsuit filed back in October of last year. Then, a technical glitch prevented about 132,000 RushCard customers from accessing funds in their prepaid accounts. These users suffered rejected transactions and fell behind on bills with their money inaccessible for several days, and portions of the $19 million fine will go to repaying fees related to these charges during the outage period. An additional $1.5 million will go toward legal fees, and individual customers will be limited to either up to $100 if they have no documentation of their hardship claims or up to $500 if they do.
“We are pleased to have reached this preliminary settlement, which will resolve the claims of our cardholders,” Rick Savard, CEO of UniRush, RushCard's parent company, said in a statement. “We believe this settlement fairly compensates our customers who were inconvenienced.”
The settlement also makes plans to credit certain RushCard users $25 each. The company also announced that it had waived all fees normally associated with transactions that occurred between Nov. 2015 and Feb. 2016. While that may be enough to soothe the pains of RushCard's customers, Law360 noted that regulatory agencies may not yet be done with the company's actions.