C’Mon Son: The Russell Simmons Hypocrisy Continues
I like thisSOURCE: Optimum-Capital
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.
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Thank you for writing this. Shame on Russell for taking advantage of the same people who made him what he is today. So much for reaching back and uplifting others when you’ve been blessed with success.
Check Out RushCard’s Response:
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,