C’Mon Son: The Russell Simmons Hypocrisy Continues
Written By Manyell Akinfe, SVP of Optimum Capital Management, LLC
I recently read an article entitled “The Banks Are Bullying The Poor and I’m Not Having It” and I couldn’t believe my eyes. Russell Simmons was speaking out against predatory banking practices. While I’m all for getting riled up about the inequalities in the financial services industry, I’m not for hypocrisy.
I have a lot of respect for Russell as an entrepreneur and businessman and can’t imagine him not seeing the similarities in what the banks are doing and what he has been doing with the RushCard. Maybe he feels because he’s “one of us” he gets a pass. The same way brothers give other brothers a pass for calling them the “N” word but will raise Cain if a Caucasian addressed them that way. I’m not sure where the disconnect lays but I have to call a spade a spade.
I agree that banks are getting outrageous with their fees. Last year alone banks collected $38.5 billion in overdraft fees and the average ATM charge, rose from $1.78 in 2008, to nearly $2.00 at the end of ’09. However, these fees are universal. The economic crisis combined with the CARD legislation that was passed last year has forced banks to fill their revenue gap by putting pressure on ALL consumers, not just those with black and brown skin. I am not disputing that there are disparities but they don’t lie in the fees. We need to focus on the PRODUCTS & SERVICES that are pushed in our communities like refund anticipation loans, Rent A Centers, check cashing facilities and pre-paid debit cards.
I understand the need to market items in a way which inspire action and evoke change; however, what Russell Simmons seems to be doing is taking advantage of his prominence in the minority community to sell a predatory product. When I first saw the RushCard I was excited. I was confident that if it wasn’t in the best interest of the people, Russell wouldn’t be a part of it. I was clearly wrong. When you compare the RushCard with a typical card from a traditional bank the differences are evident.
RushCard Monthly Pre-Paid Debit vs. Typical Bank Card
Activation Fee: RushCard = $3.00 Typical Bank Card = Free
Monthly Fee: RushCard = $9.95 Typical Bank Card = Free with a commitment of usage or balance
Convenience Fee: RushCard = $1.00(when using pin) Typical Bank Card = Free
ATM Cash Withdrawal: RushCard = $2.50/ 2 free per month Typical Bank Card = Free (At Branch)
ATM Balance Inquiry: RushCard = $.50 Typical Bank Card = Free
Bill Payment: RushCard = $1.00 Typical Bank Card = Free
Lost or Stolen Card Fee: RushCard = $9.95 Typical Bank Card = Free
My experience as a financial advisor has taught me that there’s no one size fits all solution in personal finance. However, in all the work I’ve done with disenfranchised youth, public housing communities and the formerly incarcerated I have yet to come across an instance where it was necessary to recommend a pre-paid debit card over a traditional bank card or secured credit card.
Optimum has been in the trenches of the community since the company started in 2004 and our audience is never confused about where we stand on financial literacy and economic empowerment. A few years ago, President of Optimum Capital Management Ryan Mack wrote, “A Letter to Russell Simmons: Stop Selling Your RushCard” pleading with Russell to take a closer look into what he was pushing in our communities. Since then a few fees on the RushCard were lowered and this recent stance shows that Uncle Russ is taking a closer look at what’s really going on in the banking industry but I need him to dig much deeper. He needs to look at the Rush Card he has been pushing since 2003 to the same audience he is sticking up for in his rant because his predatory practices are doing much harm to the community.
Head coach Lane Kiffin said the team’s trainers noticed Russell struggling a little bit, so they removed him as a precaution. Black Economic Empowerment
Fully agree. If this can help, I have compiled a comparison chart of most prepaid card offerings in ar article called “Not Quite Robin Hood” and the Rush Card ranks at the very bottom.
http://starveabanker.com/blog/2009/11/not-quite-robin-hood/
There are 48 million American households who cannot, for a variety of reasons, hold a traditional banking account of any kind. Given your background in community service, I am sure that this comes as no surprise to you. Though we may not fully understand the hardships or reasoning as to why these individuals cannot maintain a traditional bank relationship, it is our mission at RushCard to give them the freedom and security to make payments, track day-to-day spending, build a positive credit file, and manage their monthly finances. Can you imagine walking out of a check cashing franchise onto the street with your paycheck, but not even your whole check since these services charge substantial fees, then managing and budgeting that cash without the proper tools? What if you couldn’t pay your bills online or even by check? How would you keep track of all of these fees?
Your representation of our fees is inaccurate and misleading. We offer our members the opportunity to choose a fee structure that best meets their needs. One plan is a “pay as you go” plan and the other is a fixed monthly fee plan that includes 2 free ATM withdrawals and unlimited free signature transactions. Your fees comparison unfairly and inaccurately combines fees from both of these plans. You also failed to mention that our Diamond RushCards have free activation with any direct deposit. Our fees are easily accessible and transparent to our members. You can view them at https://www.rushcard.com/whyrushcard/scheduleOfFees.aspx).
Since the RushCard is designed specifically for those who do not have access to a traditional bank account, it should not be compared to a traditional bank debit card. If you would like to view a comparison with our costs versus traditional banks and check cashing outlets you can do so at: https://www.rushcard.com/whyrushcard/comparison.aspx). As you pointed out, banks collected $38.5 billion in overdraft fees. What you did not point out is that only 14% of bank customers incurred 93% of that $38.5 billion. The average cost that each individual included in that 14% experiences is approximately $1,400.00 per year. So the free debit card you get when you enroll in a checking account isn’t really free after all. The 14% of bank customers that are being charged these outrageous fees need an alternative and that is what RushCard can offer, no NSF fees because you only spend what you have. Just one overdraft fee (averaging anywhere from $30-$35) is more than RushCard’s monthly fees.
One point I am sure we can both agree upon is the importance of educating others about managing their finances. When our customers login to their RushCard account they can utilize our online money manager (https://www.rushcard.com/featuresandbenefits/moneymgmt.aspx) to track spending, set goals, create a budget and much more. We want to empower our customers to build positive credit which can be accomplished through Rush Path to Credit (https://www.rushcard.com/featuresandbenefits/path.aspx) a free service offered to RushCard customers. In addition, we offer our members our FREE Prescription Discount Card that entitles anyone to discounts on regular prescription drugs.
Maybe I’m biased, but I don’t see how this is predatory,
Manyell, I commend you for such a great article! I too don’t think the RUSH card should get a pass by consumers of color or anyone for that matter. Despite how mainstream or popular someone is we should always do our due diligence when it pertains to the most significant things in our lives…I classify them as Faith, Finances, Families, & Fitness (Health). Thanks again!
I really like your magazine and respect how you are educating us and trying to protect your community. I really wish you had a branch called “Jew Magazine”. The reason I say this is I found out my loan is being held in trust by Deutsche Bank. For those not in the know, Deustche Bank was the main financial instrument used by the Nazi’s during the Holocaust. They funding the building of the “Concentration Camps” and had employees who opposed this practice killed as well. How they have become one of the largest trustee’s of MBS in the USA undetected blows my mind. If you saw a 90 year old Nazi Prison Guard on the street they deport and roll him into a court on a strecher and try him, but Deutsche Bank is allowed to profit from my mortgage month after month and there is nothing I can do about it. I can’t refinance as the program we originally qualified for through Indymac no longer exists.
COULD YOU IMAGINE WHAT IT WOULD FEEL LIKE IF YOU FOUND OUT THE KLU KLUX KLAN WAS FINANCING YOUR HOME AND THERE WAS NOTHING YOU COULD DO ABOUT IT?
We both no that would never happen, Unfortunately I am not a protected party. I have wriiten my President, my Congressman, and my Senator. I have yet to have this matter resolved.
Perhaps you could have a voice for me. I realize I am not a person of color, but I am a person and my civil rights have been violated as far as I am concerned.
I hope you will contact me and offer a suggestion that may help. I am so angry I am about to leave the keys to my house on the table and never again buy into the “American Dream”.
Respectfully,
Hope Pagano
hpagano@hopefundinggroup.com
You took the words out my mouth i could not believe when i first saw it. I will stick with Magic Johnson rent a center and Jackson Hewitt. For my banking and entertainment needs
What an awesome article. I was considering this card for my daughter, but will stick with the traditional bank.
Thanks for providing awareness!
@ WP If this is about not letting instititutions take advantage of Black people why would Rent a Center get a pass?
By the time a person finishes with the payments there they typically have paid for the substandard merchandise several times over what it was originally worth.
You should contact anybody from Lansing, Michigan, the city where Magic Johnson was born, and ask them if he has done anything of benefit for their community. His parents and relatives STILL live there and he has done NO movie theatres or ANY type of investment of ANY kind there in over 30 yrs.
He doesn’t put together projects. People come to him with ideas and he licenses the use of his name for a fee. Then he gets the hype of doing philanthropic activities.
@ Hope thats REALLY deep about the Deutsche Bank. I had heard about that once somewhere then forgot about it.
what is that saying..caveat emptor?(I’m too lazy to google) Let the buyer beware.
You have to look at these debit cards closely to see if they are a good fit. for you personally. Each has its advantage/disadvantage including the Rushcard, though I must say it is one of the best available.
It all depends on your spending habits . Example: you make an average of two online purchases in a month. The typical debit card only charges its monthly maintenance fee(as low as $4 for quite a few) whereas you’ll pay $1 for each transaction w/ the rushcard. Advantage rushcard. However you go pass 4 transactions and the rushcard will be on the losing end. On the other hand, If you use the rushard 10 times for the year, you’d only spend $10, meanwhile for the other cards you’d have to pay upwards of $50 in monthly fees for the year even if you only used the card ten times. There are several such variables everyone should assess. This makes it difficult to compare two cards much less all the cards out there.
The folks in the plastic game are all profiteers including Simmons. Not a little work goes into creating these things. But expect that when a card seems better in one aspect it always falters in another.
for me the western union card is better than the rushcard, since it only charges for inactivity after 380 days versus 60 days., and I use debit cards quite infrequently enough for this to be the matter of most importance in my case
I have used traditional bank cards and I use prepaid cards, I have found that the traditional banks have been very unfair as far as their tactics in the community. case and point I have made cash deposits into my bank account to cover checks that I have written it took the bank 5 days to process the checks.I then deposited a check for 200.00 and used my bank card to to pay a bill for the 200.00 that I deposited at the same time there was a monthly bank fee due of 9.00 the bank took their monthly fee and paid the $200.00 bill. it does not end here the other 10 checks that I wrote for the cash I deposited did not clear before the bank took their fee. for each of the 10 checks I was charged $35.00 each in over draft fees because each there were insufficient funds in the account to cover the checks. they paid all the checks only because I had overdraft protection on the account. it appears to me that they waited for the opportunity to apply their practices of sticking it to the consumer. since then I have closed my account and started using the green dot prepaid card to pay all my bills online on in person the fee for reloading the card is $4.00 but I can sacrifice the money for the headache and if the money is not there they don’t pay it helps me keep track on my finances, and if you load at least $1000.00 per month there is no monthly fee as far as using the atm I don’t. if I need cash I just I just hold some money back from loading it on the card.
As far as rent-a-center or similar I have used them for years their sub standard merchandise is only the merchandise that has been previously rented in you want quality merchandise you must tell them that want new merchandise that has not been previously rented. I have done this for all the merchandise I have purchased from them, it’s true you pay a little more for convenience but it’s worth it. it you find you cant afford it you can send it back with no headaches attached.
Hey:
News Flash:
http://www.bankofamerica.com
All those people who have trouble with credit or bad credit or no credit and need a free bank account with debit card, no fees, no minimum monthly balance with free direct deposit and free online bill pay,—Drum Roll!!!———–BANK OF AMERICA!!! Is the way to go! But you must open it online and not in the actual Bank itself!!! Try it–It works!
But the CON is:
You have to order checks and pay for them yourself–I think you get a direct deposit starter check and one check–I forgot but when you call their online banking number, inquire about it!!
You have to deposit $25 dollars into the acccount within 3 months of opening the checking accounts in order to keep it open, after that there is no minimum balance you have to keep in the account–ie: one penny is OK, lol!!!
You have to set up two checking accounts–use one for direct deposit and use the other one to pay your bills because Bank Of America does not automatically subtract the bills you pay from your account–which can lead to an overdrawn account balance if your not careful to know how much is for bills and how much is yours to withdraw. The transactions between the two accounts are unlimited without fees. You will have to add up all your bills for the month, then transfer that amount to your pay bills account.
If you don’t want two checking accounts, you have to keep calulating your money after you pay bills online but when you go to the ATM, it automatically shows your current balance–be careful!!
Hope this is helpful!
Good Luck!!!
Wow,
What can I say but at first sight of The rush card I was immediately infuriated!!! I could not believe that with all the financial gain he’d already acquired through Bet’s Def comedy jam along with his ex-wife’s wardrobe franchise, and certainly knowing himself about the banking industry and their uncanny ways of robbing people of their hard earned finances(especially in the black communities and knowing our long standing struggles as a people), that he would attempt to be of those who help to rob us further into financial strain! I remember thinking to myself, “WHAT TYPE OF BLACK MAN WOULD DO THIS TO HIS OWN PEOPLE”?? I am completely ashamed of him for doing so and have lost Major respect for him as a role model for his race! Every time I view his commercial, I just wanna smack him! Thank you Mayell for your insight and being bold enough to not only speak out against this insidious behavior but for educating our people regarding this matter!!!
Much respect to you,
Peace and blessings
Kariymah
I market the AccountNow Prepaid MasterCard (one part of strategy) for the purpose of helping consumers rebuild there credit. I am not sure about the other Prepaid Cards but our VR Tech Prepaid MasterCard offers a feature that allows for a consumer to qualify for a unsecured line of credit that is reported to TransUnion as a positive trade-line. The repayment of the unsecured loan is done automatically through direct deposit from the card holders employer, this way assuring no opportunity for late payment.
As part of the counseling I advise the client (who typically are trying to increase there scores to purchase a home) that they need to only take the min amount once a month ($20.00).
The other thing I consider to be an asset about this card is that a consumer can set up for online bill pay for items that do not report to the 3 credit reporting agencies like rent, auto insurance, cell phone..etc. This payment history is reported to the PRBC that is a 3 party reporting agency and can be used as a supplement report to your main credit report when in application for a home loan, specially FHA. HUD has issued a statement that they prefer non traditional credit to be reported by a 3 party when being used in application for a home loan.
I also advise the client that this is a short term strategy and once they are able to apply for a traditional credit card to use (responsibly) to build credit they should do so or even look at some sort of secured loan with their local Credit Union.
My experience as a former Mortgage Broker (7 years) and as a Certified Credit Consultant through Central Michigan University as well as Regional Sales Director with Financial Education Services (7 Years) is these programs work but there also needs to be an exit strategy for the client to transition to more main stream credit building strategies ASAP.